WORLD HISTORY

Detailed explanation-1: -In a centrally planned economy, major economic decisions are made by a central authority such as the government. Centrally planned economies are different from market economies where large numbers of individual consumers and profit-seeking private firms operate most or all of the economy.

Detailed explanation-2: -To ensure strong economic growth, there are two main ways that the federal government may respond to economic activity: fiscal policy and monetary policy. In the U.S., the Federal Reserve System directs the country’s monetary policy.

Detailed explanation-3: -One of the most important characteristics of a market economy, also called a free enterprise economy, is the role of a limited government. Most economic decisions are made by buyers and sellers, not the government. A competitive market economy promotes the efficient use of its resources.

Detailed explanation-4: -A command economy is one where the central government makes all of the economic decisions.