Command Economy
Definition
A command economy is an economic system in which the government has complete control over the production, distribution, and pricing of goods and services.
Analogy
Imagine a school where the principal decides what subjects you study, what books you read, and even how much allowance you receive. In a command economy, the government plays the role of the principal, making all the decisions for the economy.
Related terms
Central Planning: This term refers to a process in which a central authority (usually the government) makes all economic decisions on behalf of individuals and businesses.
State-Owned Enterprises: These are companies or industries that are owned and operated by the government in a command economy.
Price Controls: In a command economy, price controls are regulations set by the government to dictate how much goods or services should cost.
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