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Planned Economy
A Planned Economy or Command Economy is an economy primarily driven by the local government which chooses how much production an industry should perform. Given the myopic views of most governments, planned economies often resulted in production shortfalls and excesses, leading to general frustration of populaces where planned economies existed, such as most Communist countries prior to the 1980s.
359 Questions
What did China's steps to modify its centrally planned economy include?
China's steps to modify its centrally planned economy includes reversing the market regulations. They also encouraged literacy in the economy markets which worked to their advantage.
Who make the decisions in a command economy?
In a command economy government planners make the decisions and in a market the decisions are made by individuals.
Would the production-possibility frontier look different in a command economy?
The production-possibility frontier would not look different in a command economy compared to a market economy because the PPF equate the rates of production between two goods which both use equal factors of production.
How was the Soviet Union's command economy successful - how was it unsuccessful?
The command economy under Stalin is credited with turning Russia into a modern industrialized nation, and giving Russia the industrial capacity that it needed to successfully defeat the invading army of the Third Reich. In the longer term, however, it failed to gain the support of the general population which became increasingly unproductive and rebellious, culminating in the collapse of the Soviet system in 1990. People prefer to run their own lives, they do not want a command economy that controls all of their economic activity.
Why planned economic system only exists in theory?
Essentially, planned economic systems don't exist in real life (with a few notable exceptions, including North Korea) for two reasons:
1) To create a planned economic system is very complicated due to information centralisation, and would be very costly to maintain and implement. This serves as a barrier to making a planned system in the first instance.
2) Planned systems suffer from extraordinary economic inefficiencies due to incredible distortion of market signals, which normally allow individuals to make efficient good allocations and schedules. The organiser of the planned economy has to try and overcome this by perfectly predicting market equilibria and enforcing production quotas to maintain them. However, there is no incentive to follow quotas but force, since there is no reward from production.
No. Since its creation in 1946, the Italian Republic has never had a centrally planned economy.
The central government took over all of the country's agricultural land and urban rental property. It also took over banks, insurance companies, and many other businesses. The economy suffered during this period. The suffering was made even worse by severe droughts in the 1980s.
How does a command economy respond to consumer demand?
Command economy, due to the imperfect market it always creats, it shall always supply economic goods(scarcity) in the market to alow high demand, hence monopoly of the market.
Does Germany have a command economy or free market economy?
Neither: it is capitalist with state interference.
What is one way a country could change from a command economy to a market economy?
If industries that had been owned by the government become privately owned.
The Marshal plan was a postwar US economic plan to support the economies of the western European countries to prevent their fall to communist agitation believed to be supported by the Soviet Union.
The Soviet Union was deliberately never given any opportunity to participate in the Marshal Plan! It was the "enemy" that the plan was trying to oppose.
What factors and resources does the government own in a centrally planned economy?
The factors and resources that the government owns in a centrally planned economy include decisions, pricing, and the entire market.
How can you tell that the city was carefully planned?
Your teacher is asking this about a specific city, but you forget to mention which one. That makes any precise answering impossible. But very generally speaking, the lay-out of the street plan is usually a good indication of how well-planned a city was.
Why did the former Soviet Union use a command economic system instead if one based on prices?
The former Soviet Union used a command economic system instead if one based on prices it hoped to create a society in which everyone had the same choice.
Why did the former soviet union use a command economic system instead of one based on price?
it had major shortages of many goods and services
Is it fair that in a command economy the government owns and controls all aspects of the economy?
As this is a question seeking an opinion, this answer is an opinion as well. It is not "fact".
NO. It is repugnant that the government should be the sole voice in determining what products should be produced and which products should remain unproduced. The government still has a valuable role in incentivizing production of some products and banning or de-incentivizing production of other products, but putting control of production exclusively in government hands has repeatedly produced product shortfalls, starvation, and overproduction of undesired products. Command economies have led to the death or malnutrition of millions of people.
How can countries that try to change from a command economy to a market economy face?
the need to unionize workers
How does a command economy answer the question of what to produce?
A command economy answers the question of what to produce through the government. It is the role of the government to make key critical decisions in the economy.
What are the 4 basic economic problems for centrally planned economy?
The Centralised Planning has the following defects
- predominance of subjective considerations or even whims and facies of prominent members of the central planning authority,
- lack of flexibility,
- non-involvement of people in plan formulation and therefore failure of the plan to represent the real needs and aspirations of the people in the implementation of the plan and
- because of the vastness of the task of evolution and implementation involved, inefficiency and therefore failure to attain objectives and targets within specified time limit.
