What type of economy is characterized by government control over economic activity?

A command economy, characterized by significant government control over economic activity, is central to the operation of this type of system. In a command economy, the government makes all key decisions about what goods and services are produced, how they are distributed, and at what prices they are sold. This level of control extends to resource allocation and production goals, aiming to eliminate competition and ensure that all economic activities align with national goals and priorities.

In contrast, a market economy places decisions about production and consumption in the hands of individual consumers and businesses, with prices determined by supply and demand. A mixed economy combines elements of both command and market systems, incorporating government regulation alongside private enterprise. A traditional economy relies on customs and historical precedent, often engaging in barter rather than currency-based transactions.