Which type of economic system is known for its ability to change direction quickly and drastically?

• A. Command economy
• B. Market economy
• C. Traditional economy
• D. Mixed economy

Answer: (A)

Verified step by step guidance

1. Understand the characteristics of each economic system: Command economy, Market economy, Traditional economy, and Mixed economy.
2. Recall that a Command economy is one where the government centrally plans and controls economic activities, including production and distribution.
3. Recognize that because decisions are made by a central authority, a Command economy can quickly change direction by reallocating resources and changing production targets without waiting for market signals.
4. Contrast this with a Market economy, where changes depend on decentralized decisions by many individuals and firms, making rapid, drastic shifts less feasible.
5. Conclude that the economic system known for its ability to change direction quickly and drastically is the Command economy.