See the below image for the Centrally planned economy diagram. The government of a centrally planned economy decides where and when production and investment will be directed.
What is a ‘Centrally Planned Economy’. Unlike a market economy — in which private citizens and business owners make production decisions — a centrally planned economy controls what is produced and the distribution and use of resources. State-owned enterprises undertake the production of goods and services.
Central planning is also referred to as a ‘Command economy’ or ‘Communist economy.’ WIth Central planning, the theory is that the government will take ownership of the means of production and run the economy in the interest of workers.
Centrally planned economy image
