Write a sentence that makes a generalization about the nature of command economies. Refer to your completed hierarchy chart to complete this question.
The correct answer and explanation is:
Correct Answer (Generalization Sentence):
In command economies, the government makes all major economic decisions, including what goods are produced, how they are produced, and who receives them.
300-Word Explanation:
A command economy is an economic system in which the central government exercises complete control over economic activities. This system contrasts with market economies, where decisions are made by individuals and businesses based on supply and demand. In a command economy, the government sets production goals, controls resources, regulates prices, and often owns the means of production such as factories and land.
The generalization that the government makes all major economic decisions in a command economy is accurate because the system is built around central planning. Government planners determine the quantity of goods to be produced, allocate raw materials, and assign labor to specific sectors. Citizens typically do not have the freedom to start businesses or decide what to produce or sell. This structure is designed to ensure equality and meet national priorities, such as military needs or healthcare goals.
Although command economies can be effective in mobilizing resources quickly and supporting large-scale projects, they often suffer from inefficiency, lack of innovation, and shortages or surpluses of goods. These problems result from the disconnect between what planners think is needed and what consumers actually want. Without market signals like prices determined by supply and demand, it is difficult to allocate resources efficiently.
Examples of command economies include the former Soviet Union, North Korea, and Cuba. In these countries, government agencies have historically directed most economic activity. The hierarchy chart of economic systems places command economies on the opposite end of the spectrum from market economies, highlighting their reliance on central authority rather than individual choice. Therefore, a defining feature of command economies is that the government controls what, how, and for whom goods and services are produced.