Which system has economic decisions made by the government rather than by market participants?

Which system has economic decisions made by the government rather than by market participants?

• A. A diagram illustrating trade-offs between two goods.
• B. A model illustrating the flow of goods and services through the economy.
• C. An economic system in which economic decisions are made by the state or government.
• D. An economic system based on supply and demand with little government control.

Answer: (C)

This question examines who makes economic decisions in an economy—the government or market participants. The best choice describes a system where the state or government controls what gets produced, how resources are allocated, and often prices as well. That is what a planned or command economy does, with centralized decisions guiding the whole economy. The other options are tools and descriptions, not decision-makers. A diagram of trade-offs between two goods (the production possibilities frontier) helps visualize potential production choices and opportunity costs, not who decides what to produce. The model showing the flow of goods and services (the circular flow) maps interactions in the economy, not the authority over decisions. The description of an economy based on supply and demand with little government control points to a market-based system where decisions come from buyers and sellers through prices, not the government.

This question examines who makes economic decisions in an economy—the government or market participants. The best choice describes a system where the state or government controls what gets produced, how resources are allocated, and often prices as well. That is what a planned or command economy does, with centralized decisions guiding the whole economy.

The other options are tools and descriptions, not decision-makers. A diagram of trade-offs between two goods (the production possibilities frontier) helps visualize potential production choices and opportunity costs, not who decides what to produce. The model showing the flow of goods and services (the circular flow) maps interactions in the economy, not the authority over decisions. The description of an economy based on supply and demand with little government control points to a market-based system where decisions come from buyers and sellers through prices, not the government.