Question 19

Labor is allocated by the state.

In a command economy, the government plays a central role in determining the allocation of resources, including labor. This means that job assignments and workforce distribution are managed by state authorities rather than being dictated by market forces.

A) Exchanges are mainly made by bartering.

While bartering can occur in various economic systems, a command economy typically relies on centralized planning rather than informal exchange methods. Therefore, this option does not accurately represent the primary characteristic of a command economy.

B) Innovation is rewarded.

In a command economy, the emphasis is often placed on meeting state goals rather than fostering individual innovation. Consequently, this option misrepresents the nature of economic incentives in such a system.

C) Prices are regulated by the market.

In a command economy, prices are not determined by market forces but are instead set by the government. This fundamental difference makes this option incorrect for describing the characteristics of a command economy.

D) Labor is allocated by the state.

This option accurately reflects a key feature of a command economy, where the state decides how labor is distributed across various sectors. This centralized control is essential to the functioning of a command economy.

Conclusion

Labor allocation by the state is a defining characteristic of a command economy, emphasizing the government's role in economic planning and resource distribution. The other options fail to capture the essence of how a command economy operates, focusing instead on aspects that are more typical of market-driven systems. Thus, option D stands out as the correct choice.