Question

Write the meaning of Centrally Planned Economy.

Answer 1

A planned economy is a type of economic system where investment, production and the allocation of capital goods take place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized or participatory forms of economic planning. The government decides how resources are distributed and used. It is assumed that the needs of the people are not met in a market economy; therefore, in a centrally planned economy, the government controls decision-making. The government can determine the price of goods and services.