An economic system in which the government makes crucial decisions, land and capital are state-owned and resources are allocated by directives is called what?

• A. Planned Economic System
• B. Market Economy
• C. Mixed Economy
• D. Free Enterprise

Answer: (A)

This question tests understanding of economic systems by how resources are owned and decisions are made. When the government makes crucial decisions, land and capital are owned by the state, and resources are allocated by directives, the system operates through central planning. That is a planned (or command) economy, where planners decide what to produce, how to produce, and for whom to produce, rather than letting prices guide those choices.

In contrast, a market economy relies on private ownership and price signals to allocate resources, while a mixed economy combines both government and private sector roles. The term free enterprise is typically linked to private, market-driven activity with less government control. So the described setup fits a planned economy.