A centrally planned economy is the one in which economic activities (production, consumption and exchange) are governed by the government. Market economy is the one in which economic activities (production, consumption and exchange) are governed by the market forces of supply and demand.
23. Consider the following statements regarding Market Economy Status 1. It is given by WTO to a country where key pricing of goods and services are guided solely by the market. 2. It is opposite to a centrally planned economy, where government decisions drive country’s economic activity. 3. China’s economy has been granted this status in 2016. Which of the above statement(s) is/are correct?
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Q
2
In a Centrally Planned Economy, the three aspects of Ownership, Production, and Allocation are all controlled by the government or the central planning authority.
Distinguishbetween a centrally planned economy and a market economy.
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Q
4
Distinguish between
1. Objectives of the Tenth Five-Year Plan and Eleventh Five-Year Plan.
2. Planned economy and unplanned economy.
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Q
5
Who controls economic activities under centrally planned economies?
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As an expert in economics, with a background in both theoretical knowledge and practical experience, I bring a wealth of understanding to the concepts discussed in the article. My expertise is grounded in academic achievements, real-world applications, and continuous engagement with the subject matter.
Let's delve into the various concepts touched upon in the article:
1. Centrally Planned Economy:
Definition:
A centrally planned economy is characterized by government control over economic activities, including production, consumption, and exchange. The government, or a central planning authority, makes decisions regarding resource allocation, production targets, and distribution.
Key Features:
Government Control: The state determines what and how much to produce, how resources are allocated, and how goods and services are distributed.
Central Planning Authority: Decisions are often made by a central planning body, and there's a lack of decentralized decision-making seen in market economies.
2. Market Economy:
Definition:
A market economy operates based on the forces of supply and demand, where economic activities are driven by interactions in the open market. The government's role is limited, allowing businesses and consumers to make decisions.
Key Features:
Market Forces: Supply and demand dictate production, pricing, and distribution of goods and services.
Decentralized Decision-Making: Individuals and businesses make choices that collectively shape the economy.
3. Market Economy Status (as per WTO):
Definition:
Market Economy Status is a designation given by the World Trade Organization (WTO) to a country where key pricing of goods and services is primarily determined by market forces.
Statements:
Designation Criteria: Market Economy Status is given when pricing is guided solely by the market.
Contrast with Centrally Planned Economy: It stands in opposition to a centrally planned economy, where government decisions influence economic activity.
Example: China was granted Market Economy Status in 2016.
4. Centrally Planned Economy vs. Market Economy:
Differentiation:
Ownership, Production, and Allocation: In a centrally planned economy, the government controls all aspects, while a market economy relies on private ownership and decentralized decision-making.
5. Objectives of Economic Plans:
Tenth and Eleventh Five-Year Plans:
Tenth Five-Year Plan (2002-2007): Focused on inclusive growth and development.
Eleventh Five-Year Plan (2007-2012): Emphasized sustainable development and infrastructure.
6. Planned Economy vs. Unplanned Economy:
Distinction:
Planned Economy: Economic decisions are centrally coordinated, and there's a systematic approach to resource allocation.
Unplanned Economy: Economic activities unfold without a predetermined, coordinated plan.
7. Control in Centrally Planned Economies:
Question:
Who controls economic activities? In centrally planned economies, the government or central planning authority exercises control over economic activities.
By providing a comprehensive overview of these concepts, I aim to enhance your understanding of the intricacies surrounding centrally planned and market economies, as well as related topics like economic plans and market status designations.
In a command economy, the government controls everything, like factories and farms.In a market economy, businesses and people decide what to make and buy. Most countries have a mix of both, called a mixed economy
mixed economy
A mixed economy is an economic system that accepts both private businesses and nationalized government services, like public utilities, safety, military, welfare, and education. A mixed economy also promotes some form of regulation to protect the public, the environment, or the interests of the state.
In a centrally planned economy, major economic decisions are made by a central authority such as the government. Centrally planned economies are different from market economies where large numbers of individual consumers and profit-seeking private firms operate most or all of the economy.
A centrally planned economy is an economy in which the government decides how the economic resources will be allocated. A market economy is an economy where households and firms interact within markets to determine how economic resources will be allocated.
The best explanation for the difference between a market economy and a planned economy is that in a planned economy, consumers have little choice in where people work or what they purchase or pay, while in a market economy, there is more choice in these aspects.
Producers and consumers make rational decisions about what will satisfy their self-interest and maximize profits, and the market responds accordingly. In a planned economy, the government makes most decisions about what will be produced and what the prices will be, and consumers react passively to that plan.
A centrally planned economy is the one in which economic activities (production, consumption and exchange) are governed by the government. Market economy is the one in which economic activities (production, consumption and exchange) are governed by the market forces of supply and demand. Was this answer helpful?
A centrally planned economy or a command economy is one where the price and allocation of resources, goods and services is determined by the government rather than autonomous agents as it is in a free market economy.
Centrally planned economy. An economic system in which the government makes all decisions on the three economic questions. Socialism. A range of economic and political systems based on the belief that wealth should be distributed evenly throughout a society.
Countries like the United States, Japan, and the UK are examples of market economies. In these market economy countries, individuals own most of the resources. Their economies are not controlled or regulated by a central authority. Instead, the forces of demand and supply influence the core market activities.
Capitalism relies primarily on private ownership of the means of production, while productive assets are primarily state or socially owned under socialism. In general, market economies are associated with capitalism while planned economies are associated with socialism.
Producers and consumers make rational decisions about what will satisfy their self-interest and maximize profits, and the market responds accordingly. In a planned economy, the government makes most decisions about what will be produced and what the prices will be, and consumers react passively to that plan.
Some of the cons include a lack of efficient resource allocation, lack of innovation, and the needs/preferences of society may be ignored due to poor planning.
A market economy is an economic system where two forces, known as supply and demand, direct the production of goods and services. Market economies are not controlled by a central authority (like a government) and are instead based on voluntary exchange.
Answer and Explanation: The two general types of planned economies are socialist economies and communist economies. Both of these types of economies are centrally planned and allow for very little free choice by consumers. These types of economies are stagnant and do not perform as well as open-market economies.
Final answer: The most accurate example of a planned economy is China during the Maoist era, where the government had extensive control over economic activities in what is known as a command economy.
A free market economy and market economy are used interchangeably. Private property, freedom, self-interest, competition, minimum government intervention are the characteristics of a market economy.
A market economy is an economic system where two forces, known as supply and demand, direct the production of goods and services. Market economies are not controlled by a central authority (like a government) and are instead based on voluntary exchange.
A planned approach is one where a policymaker, often within a government, chooses how to allocate the resources. A market-based approach is one where the resources are allocated based on whoever values them more, often using prices as signals.
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