Economy, closed economy, command economy.
Which economic system is supported by this passage’s main argument? Mixed market economy, traditional economy, closed economy, command economy.
The Correct Answer and Explanation is:
Correct Answer: Command Economy
Explanation
The economic system supported by the passage’s main argument is the command economy. A command economy is characterized by strong government control over production, investment, prices, and incomes. In this system, the government makes all decisions about what goods should be produced, how much should be produced, and at what price the goods should be sold. Private ownership of resources is limited or nonexistent, and economic planning replaces market forces.
The key indicator that a command economy is being discussed is the mention of centralized control or direction of economic activity. If the passage highlights how the government decides on resource allocation, determines production quotas, sets prices, and controls employment and wages, these are all signs of a command economic structure. Typically, such a system exists in socialist or communist countries, where the goal is often to ensure equality, meet the basic needs of all citizens, and eliminate unemployment through planned distribution.
This is in contrast to:
- Mixed market economies, where both private enterprise and government intervention coexist.
- Traditional economies, which rely on customs, traditions, and barter systems, usually found in rural or tribal societies.
- Closed economies, which do not interact with other economies or engage in international trade but may still use any internal economic system (market, command, or mixed).
If the passage does not mention trade or international relations, the term “closed economy” may be a distractor. The defining clue is who controls economic decisions—in a command economy, it’s the government.
Thus, based on the passage’s focus on centralized planning and government control of economic life, the correct answer is command economy.
