Question

A command economy is also known as a planned economy. Since the government has complete control over economic activity, activity can be planned to achieve specific goals. In theory, these goals should include fairness and stability. With carefully planned distribution of wealth and an absence of supply and demand, a command economy should be highly predictable. Individuals should have equal outcomes and a level of financial stability that matches the overall stability of the economic system. In reality, centralized economic control places power in the hands of a small group of people. In communist Russia and China in the 20th century, this outsize power resulted in totalitarian rule, inequality and instability. Today, we see the same issues in North Korea, one of the only active command economies in the world.

Based on the passage, which of the following best describes the relationship between a command economy in theory and command economies in practice throughout history?

A
In theory, a command economy is not subject to market forces. In practice, command economies have been affected by supply and demand.

B
In theory, a command economy promotes instability. In practice, command economies have been insulated from instability.

C
In theory, a command economy promotes fairness. In practice, command economies have resulted in unchecked power.

D
In theory and in practice, command economies achieve equal outcomes.

Answer 1

C
In theory, a command economy promotes fairness. In practice, command economies have resulted in unchecked power.