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To put it simply, economy is the amount of money a player or their team has. Money is needed to purchase almost everything in buy phases of rounds, like armor and weapons. In Counter-Strike’s case, it's needed for utilities, and for Valorant, it’s needed for abilities.
Many factors are included when discussing what affects the economy in Valorant and Counter-Strike. Things like how many kills a player has done, whether or not they’ve planted the bomb, whether they’ve survived the round, or if they’ve won the round. In Counter-Strike 2’s case, the economy even depends on what weapon the player gets a kill with. If someone gets a kill with a knife, they get a high kill reward, whereas with an AWP, it’s a small reward.
The secret behind managing the economy is understanding when to buy things and when to save. For example, when a player notices that their entire team has a lot of money, it’s always best to have a full-buy round, where the team buys whatever weapon they’re best at using and all utilities.
On the other side of the spectrum, there are Eco rounds. In Eco rounds, when a player sees that their entire team has a low amount of funds, they try not to buy anything, not even armor. Having an eco round makes it so that even if a team loses the round, they have enough money by the next round to make a comeback.
The final type of round is a half-buy. When a team has a broken buy, where some players have money for proper weapons and some don't, the ones who do have it will buy a little bit so they have a weapon and money left over for the next round.
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