Ch.+2.3


 * Ch. 2.3 Notes & Questions #1-4**


 * How is a Centrally Planned Economy Organized**
 * Central government rather than individual producers and consumers in markets answers the key economic questions of production and consumption
 * Government Control of Factor Resources and Production**
 * in a centrally planned economy, the government owns both land and capital
 * It's its own labor, by controlling where individuals work and what they are pain
 * the government decides what to produce and how much to charge
 * Socialism and Communism**
 * **Socialism** is a social and political philosophy based on the belief that democratic means should be used to distribute wealthy evenly throughout a society
 * **Communism** is characterized by a centrally planned economy with all economic and political power resting in the hands of the central government
 * Communists think that a socialist society can only exist after a violent revolution
 * **Authoritarian** governments exact strict obedience from the citizens and do not allow individuals freedom of judgement and action
 * Soviet Agriculture**
 * In the Soviet Union the central government created large state-owned farms and collectives for most of the country' s agricultural production
 * **Collectives** were large farms leased from the state to groups of peasant farmers
 * Soviet Industry**
 * Soviet factories also were state-owned
 * **Heavy industry** requires a large capital investment to produced items used in other industries
 * Soviet Consumers**
 * "We pretend to work, and they pretend to pay us" is a popular joke in the Soviet Union
 * Problems of Centrally Planned Economies**
 * Central planning can be used to jumpstart an industry and to guarantee jobs and income
 * on the flip side however, the things are poor quality, serious shortages, nonpriority goods and services, and diminishing production


 * Questions**
 * 1) Socialism is about distributing wealth across the society and Communism is all power to the tyrant
 * 2) Strict obedience from the citizens and lack of freedom of judgement and action
 * 3) Because all the production was going to the government and all the profit made was going to the government
 * 4) They were stuck with leftover, lower-quality resources with which to create their products