Future Business Leaders of America (FBLA) Marketing Practice Test

In a controlled economy, who primarily makes decisions about production and consumption?

1. Private individuals

2. Government authorities

3. Market forces

4. Non-profit organizations

The correct answer is: Government authorities

In a controlled economy, the primary decision-maker regarding production and consumption is government authorities. This type of economic system is characterized by significant government intervention where the state plans and directs economic activity. As such, the government typically decides what goods and services are produced, how they are produced, and who receives them. Contrary to a market economy, where private individuals and market forces operate with minimal governmental interference, in a controlled economy, individual choices are constrained by central planning. The government sets production quotas and allocates resources in alignment with its economic goals, thereby ensuring that societal needs are met as defined by state authorities. Overall, this leads to an economy where the dynamics of supply and demand are largely managed by the government rather than by the free market.