In which economic system are decisions primarily made by an authority like a government agency?

In a command economy, decisions regarding the production and distribution of goods and services are made primarily by a central authority, such as a government agency. This type of economic system contrasts sharply with others, as it often involves extensive government control over various aspects of the economy. The government plans and directs economic activity, determining what to produce, how much to produce, and at what prices goods will be sold.

This centralized decision-making process aims to achieve specific economic goals, such as equitable distribution of resources or the provision of public services, rather than allowing supply and demand dynamics to dictate market outcomes.

In contrast, other economic systems like market economies emphasize individual decision-making where consumers and producers interact freely, and mixed economies incorporate elements of both government intervention and market-driven principles. Traditional economies rely on customs and historical practices to make economic decisions, often lacking the government-directed planning seen in command economies. Thus, the defining characteristic of a command economy is the predominant role of government in economic decision-making.