Centrally planned economy is referred to as that type of economy or economic system where the important decisions regarding how to produce, what to produce and for whom to produce are taken by a central authority which is generally the government makes the decisions regarding the manufacturing and distribution of products.
Centrally planned economies are also known as command economies, where the prices are controlled by a centrally managed bureaucracy. The theory behind centrally planned economy is that the government will take control of the means of production and run the economy with fair distribution to all.
