A:

A command economy and a shadow economy are two very different economic systems. One system is controlled by the government, which determines the production and prices of goods and services. The other is an economic system usually associated with illegal goods and services.

A command economy is an economic system where the government controls the economy. The government dictates the production and prices of goods and services. This is unlike a free market economy, where the forces of supply and demand dictate production levels and prices. A command economy arises in communist societies such as North Korea and the former Soviet Union. This can lead to people engaging in a shadow economy.

A shadow economy, or black economy, is an economic system within a country that consists of black-market activities. The black economy violates a country's rules and regulations because the economic activities take place illegally and participants avoid taxes. A shadow economy arises when governments make transactions illegal or by making a good or service unaffordable. This economy looks to get around government restrictions. Unlike a command economy, this is not regulated by a government.

For example, suppose a good or a service is made illegal in a command economy. Those who want or need the good or service must engage in the shadow economy. This is true for the illegal weapons and drug trade, which is an example of an illegal economic activity found in a shadow economy.

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