Which of the following is an example of a command economy?

Study for the NCFE Social Studies Test. Explore multiple choice questions, each with hints and explanations. Prepare effectively for your exam!

A command economy is characterized by significant government control over the production and distribution of goods and services, where central authorities make all economic decisions regarding what to produce, how to produce it, and for whom to produce it. This type of economy contrasts with market economies, where these decisions are typically made by individuals and businesses based on supply and demand.

North Korea is a prime example of a command economy because its government, led by the state, exercises strict control over all economic activities. The government owns most industries and directs economic planning, leaving little to no room for private enterprise or market forces. This centralized planning is intended to meet specific political and social goals rather than respond to the free market's demands.

The other economies listed—those of the United States, the European Union, and India—are more aligned with market principles where private individuals and businesses play a significant role in economic decision-making, reflecting market trends and consumer choices.

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