Question

The North Korean government controls all parts of the country’s economy. The government’s economic plans aim to make the country economically independent, but the country has a history of food shortages and other shortages. While the government states that it wants to improve the standard of living in the country, it does little to accomplish this goal. Instead, it spends a lot of money building up the military.

What does this example illustrate?

Governments with traditional economies struggle to meet their goals.
Governments with market economies struggle to meet their goals.
Governments with mixed-market economies struggle to meet their goals.
Governments with command economies struggle to meet their goals.

Answer 1

Governments with command economies struggle to meet their goals.

Explanation: North Korea’s government controls the economy, sets plans, and still faces shortages and poor living standards — classic problems of command economies.