Question

Slyvania is a communist country in which the central government determines what goods and services satisfy its citizens' needs, how the goods and services are produced, and how they are distributed. Which statement is likely to be true about Slyvania’seconomy?

Answer 1

There are mainly 3 types of economic system. These are:

• Traditional economic system. In this system, economic histories, beliefs and tradition determines which goods needs to be produced.
• Command economic system: In this system, government rather than market determines which goods to be produced.
• Market economic syste: In this system, market forces determines the goods and services which needs to be produced in an economy.

As Slyvania's government determines what goods and services needs to be produced, it must be form of Command economic system.