Google
Monday 
May 28, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
SILVER CERTIFICATE: Paper currency issued by the U. S. Treasury from 1878 until the 1960s that could be exchanged for an equal value of silver. An occasional silver certificate will pop up in circulation, but for the most part they have been relegated to the storage vaults of collectors and have been replaced by Federal Reserve notes as the nation's paper money.

Visit the GLOSS*arama


PLANNED ECONOMY:

An economy, or economic system, that relies heavily on central planning by government to allocate resources and answer the three basic questions of allocation. A planned economy is often a type of command economy, in which government uses its coercive powers to implement central planning allocation decisions.
A planned economy is one in which government commands (directs, orders, or dictates) the vast majority of resource allocation decisions according to a central plan. The contrasting economic system is a market-oriented economy, in which resource allocation decisions are achieved primarily through voluntary market exchanges.

The goal of a planned economy is to avoid or correct the failings and imperfections of capitalism and a market-oriented economy. The primary imperfections are:

  • Market failure inefficiencies, especially market control.
  • Business cycle instability that creates unemployment problems.
  • Concentration of wealth and income and resulting inequality problems.
In theory, a planned economy can avoid these problems with a well-conceived, well-executed plan governing the allocation of resources, goods, and services. Communist and socialist countries, especially China and the former Soviet Union, provide the primary examples of centrally planned economies.

The level of detail needed in planned economies is extensive. Every input, every output, every intermediate good, every worker, every resource is allocated based on a predetermined plan. Such planning is inherently less flexible and less efficient than markets.

In practice, a planned economy tends to be inefficient because:

  • One, the resources used for the central planning process cannot be used to undertake actual production. In other words, a person (the planner) who spends eight hours calculating how much flour is needed to produce bread, is not actually producing any bread.

  • Two, the central planning process, being developed and implemented by mere humans, is inherently flawed. Mistakes happen. Inputs are sent to the wrong factories. A decimal point is misplaced. Too much of one good is produced and too little of another. All of these mistakes mean less output is produced with available resources.

While communism and socialism are the primary examples of planned economies, market-oriented economies such as that found in the United States, are also planned economies to some degree. Federal government agencies and leaders (President, Congress, Federal Reserve System, etc.) develop and implement broad plans for the economy. Most state and local governments also have plans for their own particular segments of the economy. These market-oriented plans, however, are not nearly as detailed as those found in command economies and they tend to rely heavily on markets.

<= PHYSICAL WEALTH, AGGREGATE EXPENDITURES DETERMINANTPLANNING HORIZON =>


Recommended Citation:

PLANNED ECONOMY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: May 28, 2018].


Check Out These Related Terms...

     | central planning | command economy | pure command economy | market-oriented economy |


Or For A Little Background...

     | economic system | three questions of allocation | fifth rule of imperfection | efficiency | equity | communism | socialism | capitalism | public sector | incentive |


And For Further Study...

     | government functions | economic goals | four estates | distribution standards | gross domestic product | inflation | unemployment |


Search Again?

Back to the WEB*pedia


APLS

GREEN LOGIGUIN
[What's This?]

Today, you are likely to spend a great deal of time calling an endless list of 800 numbers hoping to buy either a wall poster commemorating next Thursday or a pair of gray heavy duty boot socks. Be on the lookout for strangers with large satchels of used undergarments.
Your Complete Scope

This isn't me! What am I?

The first "Black Friday" on record, a friday marked by a major financial catastrophe, occurred on September 24, 1869 -- A FRIDAY -- when an attempted cornering of the gold market induced a financial crises and economy-wide depression.
"A pint of sweat saves a gallon of blood. "

-- General George Patton

MA(N)
A nth-order Moving Average Process
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster