Which feature is characteristic of a planned economy?

Which feature is characteristic of a planned economy?

• A. Prices guide production
• B. Limited government intervention
• C. Planners are the ultimate decision makers
• D. Private ownership dominates

Answer: (C)

In a planned economy, decisions about what to produce and how to allocate resources are made by central planners rather than by market forces. This means that planners are the ultimate decision makers, setting production targets, guiding where resources go, and allocating goods and services according to a central plan. Prices don’t drive decisions in the same way as in a market system; they are often set or heavily controlled by the state to fit the plan rather than reflect supply and demand. Because of this, government intervention is extensive, and private ownership of the means of production is limited or minimized, with the state playing the dominant role in economic activity.

In a planned economy, decisions about what to produce and how to allocate resources are made by central planners rather than by market forces. This means that planners are the ultimate decision makers, setting production targets, guiding where resources go, and allocating goods and services according to a central plan. Prices don’t drive decisions in the same way as in a market system; they are often set or heavily controlled by the state to fit the plan rather than reflect supply and demand. Because of this, government intervention is extensive, and private ownership of the means of production is limited or minimized, with the state playing the dominant role in economic activity.