Which economic system is characterized by central planning and government ownership of resources?

Which economic system is characterized by central planning and government ownership of resources?

• A. Market economy.
• B. Command economy.
• C. Traditional economy.
• D. Mixed economy.

Answer: (B)

Decisions about what to produce and who gets the goods are controlled by the government in a centralized way, with resources owned by the state. This combination—central planning plus government ownership—defines a command economy. In this setup, planners determine output levels, allocate resources, and set prices, rather than letting individuals and private businesses decide through markets. By contrast, a market economy relies on private property and voluntary exchange guided by supply and demand; a traditional economy follows long-standing customs; a mixed economy blends market forces with some government involvement but doesn’t feature broad government ownership and centralized planning. So the description fits a command economy best.

Decisions about what to produce and who gets the goods are controlled by the government in a centralized way, with resources owned by the state. This combination—central planning plus government ownership—defines a command economy. In this setup, planners determine output levels, allocate resources, and set prices, rather than letting individuals and private businesses decide through markets. By contrast, a market economy relies on private property and voluntary exchange guided by supply and demand; a traditional economy follows long-standing customs; a mixed economy blends market forces with some government involvement but doesn’t feature broad government ownership and centralized planning. So the description fits a command economy best.