Question

Provide an outline for your “optimal” plan for economic reform for a centrally planned economy. Provide a brief indication of the reason for your choices.

Answer 1

Ans) In a centrally planned economy the ruling government plus in charge of the economy ,the factors of production like land ,capital are under the government.The economy does not run according to the law of demand and supply. The following points are a part of optimal plan.

1) The government should make plan for each sector's of an economy and the welfare goals towards society should be attached with each short -term plan to achieve balance economic development like in China which is the finest example of centrally planned economy where it is h8ghly favoured to make development which favours the employment to the population

2) Each person's knowledge and potentials are to be utilised in highest capacity and work to reduce the non- employment

3) The optimal plan should include Prioritized production where according to the motives of the government production should be done taking into the societal benifts ,production of food items, clothes and shelter should be highly priorities and accumulation of wealth in some hand should not be allowed as China has worked very hard to reduce the gap in wealth of rich and poor.

4) Optimal plan should mobilise the resources quickly and with efficiency as a efficiency will result in saving of resources and time of the country ,As it will results in economies of scale which will make a country export more competitive against the other countries as China is exporting its goods in huge amount to the World because of low cost of production