A command economy in which the government controls all aspects of economic activity is called:

• A. a laissez-faire economy
• B. a market economy
• C. a centrally planned economy
• D. a mixed economy

Answer: (C)

Verified step by step guidance

1. Understand the definitions of the different types of economies: a laissez-faire economy is one with minimal government intervention; a market economy relies on supply and demand with private ownership; a mixed economy combines elements of both government control and private enterprise; and a centrally planned economy is one where the government controls all economic activity.
2. Identify the key phrase in the problem: 'the government controls all aspects of economic activity.' This indicates full government control over production, distribution, and pricing decisions.
3. Match this key phrase to the correct type of economy. Since the government controls all economic activity, it aligns with the definition of a centrally planned economy.
4. Eliminate other options based on their definitions: laissez-faire and market economies emphasize limited or no government control, and mixed economies involve partial government intervention, not full control.
5. Conclude that the correct answer is a centrally planned economy because it best fits the description of complete government control over economic activities.