Question

According to our reading, what does the term Command Economy mean?

Multiple Choice

• A. It refers to a situation where a few people in government are directing the entire economy.

• B. It refers to the CEOs, venture capitalists, and senior management. In other words it's referring to those who have the power to make business decisions.

• C. None of the above.

• D. It refers to the fact that people have more economic power versus the government.

Answer 1

A command economy is one where the government makes centrally planned economy.

A. Correct option. When people in the government make all economic decisions from production of goods and services to its allocation and distribution then the term Command Economy is used for that economy. Basically some people who are elected at the government make all the economic decision which comprise of alocation - production and distribution. At times they often form monopolies in their economies!

B. Incorrect. Such a economy where people having business power make decisions is a free market economy. A free market (laissez faire) is the main feature of a capitalist economic system where the main aim is to maximize profits.

C. Incorrect. Option A is correct.

D. Incorrect. Such an economic system would be an anarchic economic system!