(21) To move from a system of central planning to a market system, an economy ge
ID: 1140202 • Letter: #
Question
(21) To move from a system of central planning to a market system, an economy generally implements which of the following steps? Nationalization of industry Privatization of capital Regulation of prices Transition from agriculture to industry
(22) Which of the following factors contributed to the difficulty of the transition in the former Soviet Union? Capital was not privatized. Households preferred the communist system. Free market institutions were not in place. Tax rates were excessively high.
(23) How are resources allocated in market and centrally planned economies? Prices allocate resources in a market economy; central planners allocate resources in a centrally planned economy. The supply of and demand for money determine the allocation of resources in a market economy; the people allocate resources themselves in a centrally planned economy. Corporations determine the allocation of resources in a market economy; central planners allocate resources in a centrally planned economy. Voters determine the allocation of resources in a market economy; central planners allocate resources in a centrally planned economy.
(24) Which of the following policy measures would help prevent rapid inflation following the deregulation of prices? Setting interest rates at a fixed and constant rate Maintaining price controls on some basic goods, such as bread and fuel Maintaining tight control over the money supply Creating an inflation board to monitor price increases
(25) The role of the price of labor in a market economy is to guarantee that resources are always allocated to their most efficient use. provide information about where resources are best employed and to give workers an incentive to work hard. ensure that workers are fairly paid for the work they do. motivate people to change jobs frequently, increasing the level of income in the economy.
Explanation / Answer
Ans
1 Privatization of capital is often the first step
2 free market institutions were not in place. There was hardly any free market institution left
3 A is right
4 maintaining tight control over money supply. Remember mv=py
5 A is right. This is function of price system
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