Which of the following is a characteristic of a command economy?
A. Prices determined solely by market forces
B. Consumer sovereignty as the guiding principle
C. Decentralised decision making by private firms
D. Central authority allocates resources according to a plan
Answer: Option D
Solution (By JKSSB Mock Tests)
In a command (planned) economy, a central planning authority makes major decisions regarding production, allocation of resources and distribution of goods.
Explanation:
Real Business Cycle theory attributes macroeconomic fluctuations mainly to real shocks, particularly technological disturbances, under the assumption of continuous market clearing and rational expectations.
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