Final answer:
A political system with a centrally planned economy and all powers vested in the government is known as a command economy or a planned economy. This is contrasted with market economies, where decisions are made by businesses and individuals.
Step-by-step explanation:
A political system characterized by a centrally planned economy with all economic and political power resting in the hands of the central government is known as a command economy or a communist or planned economy. In this system, the government owns the means of production and central planners make all decisions regarding what to produce, how to produce it, and who receives the produced goods. This contrast with a market economy where such decisions are made by businesses and individuals through a decentralized process involving supply and demand.
Countries such as the former Soviet Union, China, North Korea, and Cuba have been examples of command economies. In recent times, however, some of these countries have transitioned towards more market-oriented systems, though the characteristics of their planned economy pasts can still be observed. Critics often point out the tradeoff between equality and personal freedom within such systems, noting that while there may be some level of economic equity, it comes at the cost of individual liberty and efficiency.