A token economy, in the crypto sense, is covered in full under tokenomics, which explains supply schedules, allocation, incentives and how they affect a project. This page explains the longer phrase, which appears in whitepapers and crypto glossaries.
In crypto, a token economy is the whole system of incentives and flows that surrounds a project's token: how tokens are issued, who receives them, what they can be used for, and how rewards, fees and penalties encourage users, developers and investors to behave in ways that support the network. A token may work as a means of payment, a utility token giving access to a service, or a governance token carrying votes. Designers try to balance demand for the token against new supply so the system stays sustainable. More broadly, the phrase is sometimes used for the wider blockchain economy of assets and services built on tokens.
The names differ because "tokenomics", a blend of "token" and "economics", became the standard crypto term, while "token economy" is older and more general. In behavioural psychology, a token economy is a reward system in which people earn tokens, such as points or stickers, for desired behaviour and exchange them for privileges, used in schools and therapy since the 1960s. Crypto writers sometimes borrow the comparison, since both rely on tokens to shape behaviour.