Centrally Planned Economy

Dictionary Says

Definition of 'Centrally Planned Economy'

An economic system in which economic decisions are made by the state or government rather than by the interaction between consumers and businesses. Unlike a market economy in which production decisions are made by private citizens and business owners, a centrally planned economy seeks to control what is produced and how resources are distributed and used. The production of goods and services is undertaken by state-owned enterprises.
Investopedia Says

Investopedia explains 'Centrally Planned Economy'

Centrally planned economies assume that the market does not work in the best interest of the people, and that in order for social and national objectives to be met a central authority needs to make decisions. The state can set prices for goods and determine how much is produced, and can focus labor and resources on industries and projects without having to wait for private investment capital.

Most modern economies are a mixture of centrally planned economies and market economies, with governments controlling some aspects of the economy and the private sector controlling others.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Market Economy

    An economic ...
  2. Laissez Faire

    An economic ...
  3. Invisible Hand

    A term coined by ...
  4. Anglo-Saxon Capitalism

    A form of ...
  5. Capitalism

    An economic ...
  6. Free Enterprise

    An economic ...
  7. Goldilocks Economy

    An economy that ...
  8. Goldilocks Economy

    An economy that ...
  9. Closed Economy

    An economy in ...
  10. Boom

    A period of time ...

Articles Of Interest

  1. Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  2. The History Of Economic Thought

    Economics is a vital part of every day life. Discover the major players who shaped its development.
  3. State-Run Economies: From Public To Private

    Find out how former Iron Curtain countries used private enterprise to join the world financial markets.
  4. The History Of Capitalism: From Feudalism To Wall Street

    Find out how the economic system we now use was created.
  5. 4 Misconceptions About Free Markets

    These fallacies have hounded free market economists since the days of Adam Smith.
  6. What Is An Emerging Market Economy?

    Emerging markets provide new investment opportunities, but there are risks - both to residents and foreign investors.
  7. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
  8. The Uses And Limits Of Volatility

    Check out how the assumptions of theoretical risk models compare to actual market performance.
  9. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  10. 5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center