ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In a true communist economy, the community makes decisions. In most communist countries, the government makes those decisions on their behalf. This system is called a command economy.

Detailed explanation-2: -In a command economy, the central government dictates the level of production of goods and controls their distribution and prices. Proponents of command economies argue government control rather than private enterprise can ensure the fair distribution of goods and services.

Detailed explanation-3: -Both socialism and communism are types of a command economy. In all three, the government controls businesses, resources, and economic activity in the country. All have central planning, too.

Detailed explanation-4: -The theory of a command economy was defined by Karl Marx in the Communist Manifesto as “common ownership of the means of production, ” and it became a typical characteristic of communist governments.

Detailed explanation-5: -The production of goods and services under capitalism is based on supply and demand in the general market-known as a market economy-rather than through central planning-known as a planned economy or command economy. The purest form of capitalism is free market or laissez-faire capitalism.