ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -When a country’s central government decides the approximate production levels of different goods and also sets their prices, it is known as a command economy or planned economy.

Detailed explanation-2: -The command economy is a component of a communist political system, while a free market system exists in capitalist societies.

Detailed explanation-3: -An economic system is a means by which societies or governments organize and distribute available resources, services, and goods across a geographic region or country. Economic systems regulate the factors of production, including land, capital, labor, and physical resources.

Detailed explanation-4: -The most famous example of a command economy was the former Soviet Union, which operated under a communist system. Since decision-making is centralized in a command economy, the government controls all of the supply and sets all of the demand.

Detailed explanation-5: -Government Controls Production in Command Economy The government decides the means of production and owns the industries that produce goods and services for the public. The government prices and produces goods and services that it thinks benefits the people.