Florida Teacher Certification Examinations (FTCE) Social Science Practice Test

Which country is known for having a planned economy?

1. Germany

2. France

3. China

4. Australia

The correct answer is: China

China is known for having a planned economy, where the government exerts a significant degree of control over economic decisions. In a planned economy, the government typically makes all important decisions regarding the production and distribution of goods and services, often through central planning committees. China operates under a system known as "socialism with Chinese characteristics," which incorporates elements of capitalism but is fundamentally guided by the state. This allows the government to focus on long-term economic goals and mobilize resources efficiently to achieve economic growth. In contrast, the other countries listed—Germany, France, and Australia—have mixed economies that combine both free market and planned elements, with a greater emphasis on market-driven economic principles. These economies allow for private enterprise to make most decisions regarding production and distribution, where market forces largely dictate prices and supply. Thus, the distinctive characteristic of a planned economy is clearly embodied in China's system, marking it out from the others.