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Economics vocabulary · Core Concepts

Planned economy

Meaning in economics, with examples

nounCommon term

In economics, planned economy means: An economic system in which the state decides what is produced, how much, and at what price, instead of leaving these choices to markets.

In Turkish: planlı ekonomi, merkezi planlı ekonomi, komuta ekonomisi

How it is used

Also called a command economy or centrally planned economy. Textbooks contrast it with a market economy and a mixed economy. The Soviet Union, with its five-year plans, is the classic historical example. Typical problems discussed are shortages, queues and weak incentives.

Example sentences

  1. In a planned economy, a government agency sets the price of bread.

  2. The shift from a planned economy to a market economy took many years.

Common collocations

  • centrally planned economy
  • command economy
  • five-year plan
  • transition from a planned economy
  • market economyAn economic system in which prices, production and wages are mainly decided by supply and demand in free markets, not by government plans.
  • economyThe whole system by which a country or region produces, sells, buys and uses goods and services, including its businesses, workers, money and government.
  • incentiveSomething such as a reward, a price or a penalty that encourages people or firms to act in a particular way.
  • shortageA situation in which buyers want more of a product than sellers offer at the current price, often because the price is held below equilibrium.
  • privatisationThe sale of state-owned companies or services to private owners, or handing over their management to the private sector.

More terms: Core Concepts

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This page explains English vocabulary for learners. It is not financial advice.