GACE Geography Practice Exam 2025 – Your All-in-One Guide to Exam Success!

A command economy relies primarily on government planning to direct economic activity. In this system, the government makes decisions about the production and distribution of goods and services, often through centralized control. This means that economic outcomes, such as what to produce, how much to produce, and at what prices to sell goods, are determined by government officials rather than by market forces or individual consumers.

In contrast, a market economy operates on supply and demand principles, where decisions about production and pricing are made by private individuals and businesses. A mixed economy incorporates elements of both market and command economies, allowing for some government intervention while still promoting private enterprise. A traditional economy is based on historical practices and customs, often relying on subsistence farming and barter systems, rather than government planning. Understanding these distinctions highlights why a command economy is characterized by central planning and control.