Podcast
Questions and Answers
What primary role does the government play in a planned economy?
What primary role does the government play in a planned economy?
- Facilitating free market competition
- Determining output targets and resource allocation (correct)
- Restricting imports and exports
- Encouraging private entrepreneurship
What is a significant disadvantage of a planned economy?
What is a significant disadvantage of a planned economy?
- High productivity rates
- Widespread unemployment
- Government ownership of resources (correct)
- Abundant consumer choices
How does a planned economy aim to ensure economic stability?
How does a planned economy aim to ensure economic stability?
- By having no business cycles or unemployment (correct)
- By encouraging competition among businesses
- By eliminating consumer choice
- By increasing export opportunities
Which of the following is NOT an advantage of a planned economy?
Which of the following is NOT an advantage of a planned economy?
What is the effect of profit motivation in 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?
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 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?
What term describes the government setting the amount of goods produced over a specific period in a planned economy?
Flashcards
Planned Economy
Planned Economy
An economic system where the government controls most resources and production.
Output targets
Output targets
The desired amount of goods or services to be produced.
Resource allocation
Resource allocation
How a country distributes resources to meet production needs.
Productivity decline
Productivity decline
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Stability (planned economy)
Stability (planned economy)
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Limited freedom (planned economy)
Limited freedom (planned economy)
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Centralized planning
Centralized planning
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No unemployment (planned economy)
No unemployment (planned economy)
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Study Notes
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
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Description
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.
