Multiple Choice
According to some economists, which of the following is considered a positive effect of mild inflation?
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0. Basic Principles of Economics
Positive and Normative Analysis
Multiple Choice
Which of the following is NOT a characteristic of a command economic system?
A
Production targets are set by the government
B
Government owns most of the means of production
C
Resource allocation is determined by central planners
D
Prices are set by supply and demand in free markets
Verified step by step guidance1
Step 1: Understand the definition of a command economic system. In such a system, the government typically controls the means of production and makes decisions about resource allocation and production targets.
Step 2: Identify the characteristics of a command economy: production targets set by the government, government ownership of resources, and resource allocation determined by central planners.
Step 3: Recognize that in a command economy, prices are generally not determined by supply and demand but are instead set or controlled by the government.
Step 4: Compare the given options to these characteristics and note that 'Prices are set by supply and demand in free markets' contradicts the nature of a command economy.
Step 5: Conclude that the statement about prices being set by supply and demand in free markets is NOT a characteristic of a command economic system.
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