Question

Pick an e economics theory teach us something in your own words . We will be eagerly reading your posts to learn about your topic.

The blog should be at least 500 words to adequately inform.

Answer 1

Command Economic System-

A big portion of the financial system is governed by a centralized authority in a command financial scheme. For instance, the central government made most of the decisions in the U.S.S.R. The essence of communist philosophy was this sort of economy.

Because the state is such a key economic characteristic, it is often engaged in everything from planning to resource redistribution. A command economy is capable of generating a good resource supply and rewarding affordable prices for its people. This capacity also implies the state generally owns all the critical sectors such as utilities, aviation, and railroad.

In a command economy, it is theoretically possible for the government to create enough jobs and provide goods and services at an affordable rate. However, in reality, most command economies tend to focus on the most valuable resources like oil.

Five Characteristics of a Command Economy

1. A key economic plan is created by the government. The five-year plan sets financial and societal objectives for each country's industry and region. Shorter-term plans transform the goals into actionable goals.
2. Depending on the core plan, the government allocates all funds. It attempts to make the most effective use of the nation's capital, labor, and natural resources. It promises to use the skills and abilities of each person to their maximum ability. It is aimed at eliminating unemployment.

3. The core plan establishes priorities for all products and services to be produced. This involves controls of quotas and prices. Its objective is to provide sufficient food, accommodation and other basics to satisfy everybody's requirements in the nation. It also sets priorities at domestic level. These include war mobilization or solid financial development.

4. The state owns companies with monopolies. These are considered vital to the economic objectives in sectors. That involves finance, services, and the automotive industry. In these industries, there is no national competition.

5. The government creates laws, regulations, and directives to enforce the central plan. Businesses follow the plan's production and hiring targets. They can't respond on their own to free market forces

Advantages of Command Economic System

If properly executed, the government can massively mobilize resources. This mobility can provide employment for nearly every citizen. Rather than an person, the state can concentrate on the good of society. This focus could lead to resource use being more effective.

Disadvantages of Command Economic Systems

It is hard for central planners to provide for everyone’s needs. This challenge forces the government to ration because it cannot calculate demand since it sets prices.

There is a lack of innovation since there is no need to take any risk. Workers are also forced to pursue jobs the government deems fit.

The state regulates important elements of financial manufacturing in a command economy. The state chooses the means of manufacturing and owns the sectors producing public goods and services. Government prices and manufactures products and services that it believes the individuals benefit.

A nation with a command economy relies on macroeconomic goals and political factors to determine what the nation generates products and services and how much it generates. It usually has macroeconomic objectives that the government wishes to achieve, and to do so it will generate products and services. On the basis of these goals and considerations, the state allocates its funds.