Microeconomics M1A3

Microeconomics

In a command or planned economy, the government, not the market, regulates the factors of production and economic activities considered essential to the function of the economy.  Economic decisions including what goods and services to produce (supply), how resources are allocated and regulated and how profits are distributed are made and implemented by the government.

Provide examples and justify your conclusions. Quotations, paraphrases, and ideas you get from books or other sources of information should be cited using APA style

How is the U.S. economy different from a command economy? Can the U.S. economy be called a true free market economy? Explain your answer by discussing the ways in which the federal government interacts with and regulates the U.S. economy in the context of both a command and free market economy.  

At the present time, I feel a great number of people in the world believe that the U.S. economy is the exact opposite of a command economy. “A command economy is where economic decisions are planned out in detail by a central government authority. The plan is implemented through laws, regulations and directives,” (Amadeo, 2013). Purely by definition, the U.S. is not a command economy; however, how can the U.S. be considered completely to be a market economy when the government does step-in and has been known to significantly affect our economy through certain laws and regulations. To be considered entirely a true free market economy, our country has too much input from our government. A market economy exists when “companies, individuals, and resources, use prices in the market to indirectly coordinate economic activity, and these individuals and businesses seek to achieve their economic goals through their own decisions regarding work, consumption, or production, (McConnell, Brue & Flynn, 2010). Consequently, I believe the U.S. cannot say 100% that they meet the pure definition of either a command economy or a...