The description 'A group of planners makes all economic decisions and allocates resources' best describes which type of economy?

The description 'A group of planners makes all economic decisions and allocates resources' best describes which type of economy?

• A. Traditional economy
• B. Market economy
• C. Mixed economy
• D. Command economy

Answer: (D)

The description points to a command economy. In a command economy, central planners or the government make all the major economic decisions—what to produce, how to produce it, and how to allocate resources and goods. Prices and markets have little to no guiding role because decisions come from a central plan rather than individual choices. This contrasts with a market economy, where decisions arise from consumer demand and price signals; a traditional economy, which follows customs and traditions; and a mixed economy, which blends government planning with market activity.

The description points to a command economy. In a command economy, central planners or the government make all the major economic decisions—what to produce, how to produce it, and how to allocate resources and goods. Prices and markets have little to no guiding role because decisions come from a central plan rather than individual choices. This contrasts with a market economy, where decisions arise from consumer demand and price signals; a traditional economy, which follows customs and traditions; and a mixed economy, which blends government planning with market activity.