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Which of the following is a characteristic of a command economy?

a) Promotion of foreign direct investment
b) Allowing to be set by the interplay between demand and supply
c) Limited international trade
d) Restricted state ownership of means of production

1 Answer

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Final answer:

The correct answer is D. A characteristic of a command economy is restricted state ownership of means of production, where the government determines production, prices, and distribution, often leading to limited international trade and economic efficiency challenges.

Step-by-step explanation:

The characteristic of a command economy from the given options is restricted state ownership of means of production. In a command economy, the government owns or controls the factories and workers, deciding on the types and quantities of goods and services produced, their prices, and who can afford them. This system showcases collective ownership and centralized economic decision-making by government officials, often leading to limited international trade and a lack of support for foreign direct investment.

Examples of countries that have operated or are operating under a command economy include the former Soviet Union and current-day Cuba and North Korea. These economies typically restrict market forces like demand and supply from determining prices and outputs, which are hallmarks of a market economy. Command economies focus on equitable distribution but often face challenges in efficiency and may limit the free will of the citizens.

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