In a centrally planned economy, the government has minimal control over business activities, and prices are set by supply and demand.
Understand the Problem
The question is stating a definition or characteristic of a centrally planned economy, where it describes that the government has minimal control over business activities and prices are determined by supply and demand. This could imply a misunderstanding or require clarification on the nature of a centrally planned economy versus a free market economy.
Answer
The statement is incorrect; in a centrally planned economy, the government controls business activities and sets prices.
The statement is incorrect because, in a centrally planned economy, the government has significant control over business activities, and prices are set by the government rather than by supply and demand.
Answer for screen readers
The statement is incorrect because, in a centrally planned economy, the government has significant control over business activities, and prices are set by the government rather than by supply and demand.
More Information
In centrally planned economies, key aspects such as production, distribution, and prices are controlled by the government, which contrasts with market economies where supply and demand dictate business activities.
Tips
A common mistake is confusing market economies with centrally planned economies. Remember, market economies rely on supply and demand for decision-making, unlike centrally planned systems.
Sources
- Centrally Planned Economy: Features, Pros & Cons, and Examples - investopedia.com
- Command Economy | Definition + Characteristics - Wall Street Prep - wallstreetprep.com
- Differences between free-market, mixed and centrally-planned ... - tutor2u.net
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