Political Economy Economic Systems Questions
A planned economy is an economic system in which the government or a central authority controls and directs all economic activities. In this system, the government determines what goods and services should be produced, how they should be produced, and who should receive them. The main objective of a planned economy is to achieve specific economic and social goals set by the government, such as equitable distribution of resources, elimination of poverty, and overall economic stability. The government typically owns and operates key industries and resources, and sets production targets, prices, and wages. This system is often associated with socialist or communist ideologies, where the government plays a dominant role in economic decision-making. However, the effectiveness of planned economies has been a subject of debate, as they can face challenges such as lack of incentives for innovation, inefficiency, and limited consumer choice.