Which type of economic system relies on central planning by the government to decide what to produce?

• A. Traditional Economy
• B. Market Economy
• C. Command Economy
• D. Economic Equity

Answer: (C)

Central planning by the government to decide what to produce is a defining feature of a command economy. In this setup, planners map out production targets, allocate scarce resources—labor, capital, and raw materials—and determine how goods and services are distributed. The government guides or controls which industries grow, how much of each good gets produced, and often sets prices or uses directives to ensure the plan is carried out, leaving less room for market signals or consumer choice. That’s why this describes the command economy. The other options rely on different coordination mechanisms: a traditional economy follows long-standing customs and roles; a market economy relies on price signals and voluntary exchange; economic equity is a value or objective that can be pursued within various systems, not a description of how production is planned.