Economics Command Economy Questions
In a command economy, the government has control over the allocation of resources and production decisions. Therefore, when it comes to government debt, the command economy can handle it through various means.
One approach is for the government to simply print more money to pay off its debts. However, this can lead to inflation and devalue the currency.
Another option is for the government to impose higher taxes or increase the prices of goods and services to generate revenue and repay the debt. This can have a negative impact on the citizens' purchasing power and overall economic activity.
Additionally, the government can also borrow from other countries or international organizations to finance its debt. However, this can lead to dependency on external sources and potentially create future financial obligations.
Ultimately, in a command economy, the government has the authority to determine how to handle government debt, but the chosen approach can have significant consequences for the overall economy and its citizens.