![]() The government can ensure that there is full employment.What Are the Advantages and Disadvantages of a Command Economy? This allows it to ensure that there is not too much or too little of a particular good. The government can also control the level of production. This means that it can direct businesses to invest in certain sectors of the economy or to use specific resources. In addition, the government can allocate resources as it sees fit. ![]() This allows it to ensure that goods are available at a low price, or those specific goods are available in short supply. This means that it can issue directives to businesses, telling them what to produce and how much to produce. In a command economy, the government holds all the power. Instead, it is about achieving specific goals that the government has set. This means that a command economy is not necessarily about maximizing economic output. These goals may include ensuring that there is full employment, controlling inflation, or developing specific industries. The purpose of a command economy is to ensure that the government can meet its economic goals. What Is the Purpose of a Command Economy? This can distort the signals that businesses use to make decisions about what to produce and how much to produce. Or, the government may set prices that are different from what would occur in a market economy. This can be done by issuing directives to businesses.įor example, the government may tell a steel manufacturer to produce more steel, even if there is insufficient demand. In a command economy, the government is able to control economic outcomes directly. This includes setting prices, allocating resources, and dictating production levels. A command economy is a type of economic system in which the government is the sole controller of most aspects of the economy.
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