Which of the following is typical of a centrally planned economy?

• A. Private individuals own and control the majority of resources.
• B. Prices are determined entirely by supply and demand in free markets.
• C. Firms compete freely with minimal government intervention.
• D. The government makes most economic decisions regarding production and allocation of resources.

Answer: (D)

Verified step by step guidance

1. Understand the definition of a centrally planned economy: it is an economic system where the government makes most decisions about production and allocation of resources, rather than relying on market forces.
2. Recognize that in a centrally planned economy, private individuals typically do not own or control the majority of resources; instead, the government owns or controls them.
3. Note that prices in a centrally planned economy are not determined by supply and demand in free markets, but are set by the government or central planners.
4. Understand that firms in a centrally planned economy do not compete freely with minimal government intervention; rather, their activities are directed and regulated by the government.
5. Therefore, the characteristic that best describes a centrally planned economy is that the government makes most economic decisions regarding production and allocation of resources.