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A Command Economy

Essay by   •  April 24, 2016  •  Essay  •  267 Words (2 Pages)  •  692 Views

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A command economy takes place when the government controls all major aspects of a countries’ economy and economic production. The central government decides what to produce, how to produce goods and how to distribute goods and services within the economy. Command economies can be favorable for people because they can prevent abuse of monopoly power and mass unemployment. They can also produce goods which help the society and ensure everyone has access to basic necessities. A command economy creates a very powerful central government which limits individuals’ rights to pursue economic objectives. A drawback of this is that businesses unable to respond to consumer preferences because Government agencies usually have poor information about what to produce. A command economy works in contrast to a mixed economy because the government regulates the entire economy. The best example of a command economy today would be Cuba, because their economy is centrally planned and largely controlled by the government.

A mixed-market economy is an economic system in which both the private sector and the government direct the economy. Mixed-market economies can reduce the amount of government regulation and government control prevalent in a command economy. Advantages of mixed-market economies is that the government can encourage the consumption of goods that are beneficial for consumers by granting subsidies, providing information or passing laws. However, it can be difficult to know how much governments should intervene. Mixed-market economies are criticized by socialists for allowing too many market forces, and are criticized by free market economists for allowing too much government intervention.

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