What is an economy in which the government makes most decisions called?

• A. A free-market economy.
• B. A mixed economy.
• C. An economy based on barter.
• D. A socialist or command economy.

Answer: (D)

When the government makes most decisions about what to produce, how to produce it, and how to distribute goods and services, the economy is a command economy. In a socialist or command system, central planners guide production, allocate resources, and often own the major means of production. This contrasts with a free-market economy, where decisions come from individuals and businesses responding to prices; a mixed economy, where both government and market have roles; and a barter-based economy, which operates without money and centralized planning.