What is a characteristic of an economic system categorized as 'command'?

Study Economics and Personal Finance Exam. Use flashcards and multiple choice questions with hints and explanations. Prepare confidently for your test!

An economic system categorized as 'command' is characterized by significant government intervention in the economy, where the state has control over the production and distribution of goods and services. In such a system, all production decisions—ranging from what to produce, how much to produce, and the distribution of those goods—are established by central authority. This is distinct from market economies, where consumer demand, individual ownership, and market forces primarily influence production and pricing.

The premise of option B captures this essence perfectly, as it emphasizes the regulation of all production by the government. In command economies, resources are allocated according to the government's plan, aiming to achieve specific societal goals or needs rather than responding to consumer preferences or market competition. This approach can lead to inefficiencies and surpluses or shortages, depending on how well the government can predict and meet the needs of the population.

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy