Planned Economy Overview

What primary role does the government play in a planned economy?

What is a significant disadvantage of a planned economy?

How does a planned economy aim to ensure economic stability?

Which of the following is NOT an advantage of a planned economy?

What is the effect of profit motivation in a planned economy?

Which of the following countries is an example of a planned economy?

What is the main reason planned economies are thought to meet citizens' needs effectively?

What term describes the government setting the amount of goods produced over a specific period in a planned economy?

Planned Economy

Government owns most resources and factors of production
Sets output targets for each area
Allocates resources for everyone to have similar income
Aims for everyone to live comfortably
Centralised planners control factors and decide goods/services
Stable, no business cycles or unemployment
Productivity may decline due to lack of profit motive
Limited freedom of choice and career options
Also called command economies (e.g., Cuba, North Korea, Saudi Arabia, Belarus, Myanmar)

Planned Economy Decisions

Government makes major decisions regarding production (what's produced, how, and distribution)
Believes it's best positioned to meet all needs with access to all info
Provides stability, but potential for stunted growth if not managed carefully
Needs survey of human needs/consumer wants
Allocates factors of production & distribution systems
Controls import/export

Advantages of Planned Economies

No unemployment
Equal distribution of wealth
Services available to all

Disadvantages of Planned Economies

No freedom of choice
Government owns everything

Keywords

Output targets: Amount produced in a set time
Productivity: Ability to produce goods in a set time
Stability: Steadiness, not prone to change
Allocate: Assign something to a purpose or person

Explore the principles and characteristics of planned economies, where the government plays a central role in resource allocation and production decisions. This quiz covers the advantages, potential drawbacks, and examples of such economies around the world.