What is Centrally Planned Economy?
In the centrally planned economy, the central authority plans and organises all the significant pursuits in the economy. All primary decisions regarding exchange, manufacturing and utilisation of goods and services are made by the government. The government may try to attain a particular distribution of resources and a subsequent apportionment of the ultimate combination of goods and services which is contemplated to be desirable for community as a whole.
Examples of Centrally Planned Economy
For instance, if it is found that a product that is vital for the growth and well-being of the economy, health service or education, is not manufactured in sufficient amount by the individuals, the government might attempt to persuade the people to produce requisite amount of a good or a service or otherwise, the authority may determine to manufacture the goods or services. In a distinct reference, if people in the economy get a small amount of share of the ultimate mix of goods manufactured in the economy that their endurance is at stake, then the government authority might interfere and attempt to acquire a fair and equitable allocation of the ultimate mix of goods and services.
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