3 characteristics of a centrally planned economy
1. Government control: In a centrally planned economy, the government plays a central role in planning and directing economic activities. The government exercises control over the allocation of resources, production decisions, and distribution of goods and services.
2. Lack of market competition: In a centrally planned economy, there is limited or no competition among producers and suppliers, as the government controls the production and distribution of goods and services. This can lead to inefficiencies and lack of innovation, as there is no incentive for companies to improve or respond to market demands.
3. Fixed prices: In a centrally planned economy, prices of goods and services are often set by the government rather than being determined by supply and demand. This can lead to shortages or surpluses of certain goods, as the government may not accurately gauge consumer preferences or needs. Additionally, fixed prices can discourage investment and innovation, as there is little incentive for companies to improve efficiency or quality.