Command Economy
Definition
A command economy is an economic system in which the government has complete control over the production and distribution of goods and services.
Analogy
Imagine a school where the principal decides what subjects you study, what books you read, and even what clothes you wear. In a command economy, the government acts as the principal, making all the decisions for the economy.
Related terms
Market Economy: An economic system in which individuals and businesses make most of the decisions regarding production and consumption.
Planned Economy: An economic system in which a central authority makes all decisions about production, consumption, and resource allocation.
Central Planning: The process by which a central authority determines how resources should be allocated in an economy.
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