Question

Exactly what do governments in true command economies control?

Answer 1

Government plays a key role in controlling command economies.A nation with this type of economy has been successful in reaching the economic targets as nation looks out on activities of production,cost of items produced and sales.Government firstly derives strategies to increase the growth of economy by setting certain targets and goals in production and sales activities.The manufacturing and production units need to follow and adopt these strategies and should help the government in reaching the targets. In command economy,government observes companies,production units and manufacturing units keenly by setting a limit on the production level.Government makes sure that these production units and companies do not over-produce the products and items.It controls the level of production and decides how many products should be released into the market .Government also controls the inflation by setting price range on products.All companies and production units should decide the cost of the product between price range set by the government and should sell at that rate only.Government even decides the basic amount of salary which is paid to employees,employers,labourers,etc.Government allows companies to produce only those goods which satisfies people.It also restricts few goods which are illegal or against the law.

Government even controls and administers the rate of capital resources to be allotted to the companies.No company should excessively use the raw materials and level of production of that manufacturing unit and company shouldn't be increased immensely.Once the government decides to opt command over economy,various rules and regulations regarding trade,production level,sales,etc are modified.The companies which are into field of production should abide by rules and regulations.

Hence,in this way government controls the level of production and sales,inflation,trading sector,etc of that particular nation.Government need to control these activities if command economy is opted.If government is able to control these activities and if all targets are reached,then the growth rate of that economy rises.Ultimately, gross domestic product of that nation increases.