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Planned economies rely on centralized government to control all or most factors of production and to make all or most production and allocation decisions. A market economy is an economy in which individuals control production and allocation decisions through supply and demand. Planned economies appeal to people as a solution to a large amount of poverty. They promise a high rate of growth in economic prosperity, an improving quality of life, and a different distribution of wealth than market economies. When the economy fails to improve, and quality of life in the country fails to improve at the pace of market economies, the government tends to relax its control and a market economy develops. Previously planned economies are controlled by oppressive and unaccountable politicians who eventually lose power.
If an economy in a nation is characterized by a large number of people in extreme poverty and a high unemployment rate, a planned economy could be used to bring order and to stimulate productivity. Former Soviet Union disbanded due to food shortages in their planned economy, showing poor planning by their leaders. Theoretically in a market economy, when a shortage of a good arises, the prices of that good will rise giving an incentive to entrepreneurial business people to produce more of that product so they can reap the increased profits. Recently, a drought killed a large amount of corn crop, driving the price of beef and other foods up. If there were a severe drought enough to where there is not enough water to grow crops and food needs to be rationed carefully, the government may move towards a planned economy. America has a mix between market and planned economies, in that some economic activity is subsidized while some businesses have regulations. For example, when Enron caused a spike in energy prices beyond a reasonable amount in California, the government forced the company to lower its price. Being the only option for energy needs in areas where Enron provided service, a natural monopoly, Enron could have in a true market economy charged as much as they wanted for electricity and all those involved would have taken great profits.
What else can I help you with?
How would the Chinese economy be characterized?
china's economy is a centrally planned economy with a high level of government control
Would you expect new and better machinery and equipment to be adopted more rapidly in a market economy or in a centrally planned economy?
Market economy
Who decides where people will work in a centrally planned economy?
I don't quite understand your question, isn't the definition of a centrally-planned economy one in which the government plans the economy? I imagine that in most centrally planned economic schemes the government would either determine the prices or set a cap for essential goods.
Does a planned economy provide equality of wealth?
That would depend completely on the kind of economy being planned. Some plans/ideas for economies, such as those of the Venus Project, do emphasise equality of wealth. Other planned economies, as seen with many communist systems historically, do not provide equality of wealth.
Who answers the questions in a centrally planned economy?
Typically, a person who knows the answer will answer a question put to him and being in a centrally planned economy has nothing to do with it.If the question intends to ask "Who makes the decisions of how much to produce in a centrally planned economy?" the answer to that would be, generally speaking, the government, and specifically it would be an economics ministry of the state. In the Soviet Union, for example, there was the State Planning Committee, popularly known as Gosplan, that made key decisions in terms of how much to produce in all major industries.
Are the goods supplied equal to the goods demanded in a planned economy?
Theoritically seen: when Qs = Qd there is an ideal economic situation for a firm. You would call it a planned economy. However a(n) firm/economy cannot always be planned and thus have (as a result) a market clearing price (aka equilibrium price). So in practice, this theory of a planned economy cannot come true at all. Most economists just call these kinds of economies (where there are a lot of goods demanded equalised to goods supplied) free market ones. Hope it is clear now!
What fiscal policy action would cause the economy to contract?
Policies that raise taxes tend to contract the economy. In addition, policies that cause the government to do less spending contract the economy.
How would an increase in total expenditures affects the national's economy?
An increase in total expenditures affect the nation's economy would cause an expansion.
What would cause a resurgence of planned economies?
Planned economies rely on centralized government to control all or most factors of production and to make all or most production and allocation decisions. A market economy is an economy in which individuals control production and allocation decisions through supply and demand. Planned economies appeal to people as a solution to a large amount of poverty. They promise a high rate of growth in economic prosperity, an improving quality of life, and a different distribution of wealth than market economies. When the economy fails to improve, and quality of life in the country fails to improve at the pace of market economies, the government tends to relax its control and a market economy develops. Previously planned economies are controlled by oppressive and unaccountable politicians who eventually lose power. If an economy in a nation is characterized by a large number of people in extreme poverty and a high unemployment rate, a planned economy could be used to bring order and to stimulate productivity. Former Soviet Union disbanded due to food shortages in their planned economy, showing poor planning by their leaders. Theoretically in a market economy, when a shortage of a good arises, the prices of that good will rise giving an incentive to entrepreneurial business people to produce more of that product so they can reap the increased profits. Recently, a drought killed a large amount of corn crop, driving the price of beef and other foods up. If there were a severe drought enough to where there is not enough water to grow crops and food needs to be rationed carefully, the government may move towards a planned economy. America has a mix between market and planned economies, in that some economic activity is subsidized while some businesses have regulations. For example, when Enron caused a spike in energy prices beyond a reasonable amount in California, the government forced the company to lower its price. Being the only option for energy needs in areas where Enron provided service, a natural monopoly, Enron could have in a true market economy charged as much as they wanted for electricity and all those involved would have taken great profits.
What might be a hardship for citizens of a centrally planned economy making a transition to a marketability?
Workers would lose job security and guaranteed incomes.
What is pest resurgence?
I'm not entirely sure, but I would have to assume by the meaning of both words that it is a resurgence, or revival of, insect life in your area. Hope this is helpful.
What might be a hardship citizens of a centrally planned economy making a transition to a market-based system?
Workers would lose job security and guaranteed incomes.
