A principal feature of a command economy is that _____________________...
Command Economy and its Principal Feature
A command economy is an economic system in which the government or a central planning authority controls all major aspects of economic activity. In a command economy, the government makes all the decisions about what goods and services are produced, how they are produced, and who gets them. Let's discuss the principal feature of a command economy.
Central Planning Board
The principal feature of a command economy is that there is a central planning board at the top, which transmits economic decisions down to the various producing and consuming units below. This central planning board is responsible for setting production targets, allocating resources, and making decisions about what goods and services are produced and distributed. This means that the government has complete control over the economy, and there is no room for individual decision-making or market forces to influence economic outcomes.
Role of Government
The role of government in a command economy is to ensure that resources are allocated efficiently to meet the needs of the population. The government decides what goods and services are produced and how they are distributed. It also controls prices, wages, and interest rates to ensure that the economy operates efficiently. The government also owns and controls all major industries, which means that there is no private ownership of production.
Advantages and Disadvantages
The advantages of a command economy are that it can lead to rapid industrialization, economic growth, and the provision of essential goods and services to the population. However, the disadvantages are that it can lead to inefficiency, waste, and a lack of innovation. The lack of individual decision-making and market forces can also lead to shortages of goods and services and a lack of consumer choice.
Conclusion
In conclusion, the principal feature of a command economy is the central planning board, which controls all major aspects of economic activity. This means that the government has complete control over the economy, and there is no room for individual decision-making or market forces to influence economic outcomes. While a command economy can lead to rapid industrialization and economic growth, it can also lead to inefficiency, waste, and a lack of innovation.
To make sure you are not studying endlessly, EduRev has designed CA CPT study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA CPT.