In a command economy, who determines production and investment levels?

In a command economy, who determines production and investment levels?

• A. The consumer market
• B. The government
• C. The business sector
• D. Global trade agreements

Answer: (B)

In a command economy, the government plays a central role in determining production and investment levels. This system involves state control over economic resources and decision-making processes, meaning that production goals, pricing, and investment priorities are typically dictated by government planning rather than being influenced by the free market or consumer preferences. The government establishes what goods are produced, how much is produced, and how resources are allocated, aiming to achieve specific economic and social objectives. The other options do not accurately reflect the functioning of a command economy. The consumer market and business sector operate with more autonomy in capitalist systems, where supply and demand influence production decisions. Global trade agreements might affect a country’s economy but do not determine the internal production and investment levels in a command economy, which are fundamentally governed by the state. Thus, the government’s role as the primary decision-maker is what distinguishes a command economy from other economic systems.

In a command economy, the government plays a central role in determining production and investment levels. This system involves state control over economic resources and decision-making processes, meaning that production goals, pricing, and investment priorities are typically dictated by government planning rather than being influenced by the free market or consumer preferences. The government establishes what goods are produced, how much is produced, and how resources are allocated, aiming to achieve specific economic and social objectives.

The other options do not accurately reflect the functioning of a command economy. The consumer market and business sector operate with more autonomy in capitalist systems, where supply and demand influence production decisions. Global trade agreements might affect a country’s economy but do not determine the internal production and investment levels in a command economy, which are fundamentally governed by the state. Thus, the government’s role as the primary decision-maker is what distinguishes a command economy from other economic systems.