ECONOMICS
ECONOMIC SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Can ensure stability.
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Serves people collectively by focusing on equality.
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Products produced fulfill needs.
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Lack of incentive for innovation.
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Detailed explanation-1: -Command economy advantages include low levels of inequality and unemployment and the common objective of replacing profit as the primary incentive of production. Command economy disadvantages include lack of competition, which can lead to a lack of innovation and lack of efficiency.
Detailed explanation-2: -The advantages of a command economy are: The government can ensure that there is full employment. The government can control inflation. The government can direct businesses to invest in certain sectors of the economy.
Detailed explanation-3: -The incentive problem: central planners are themselves humans, so can make decisions for their own interests rather than that of the nation, as well as the lack of wage-or profit-based incentives for managers/workers to do more than the bare minimum of effort to promote efficiency or reduce costs.
Detailed explanation-4: -The government creates a central economic plan. The government allocates all resources according to the central plan. The central plan sets the priorities for the production of all goods and services. The government owns monopoly businesses. More items