Comparison of economic systems Imagine that you are writing a report for the gov

Question

Comparison of economic systems Imagine that you are writing a report for the government of Customaria on the impact of changing from a traditional economy to more of a market system. You've just finished constructing a table summarizing your results when your computer crashes, corrupts your file, and scrambles your words. A computer technician has been able to reconstruct the characteristics of the economy you wrote about, but you have to recall whether each characteristic would increase, decrease, or not change. In the table that follows, identify the most likely changes in the listed characteristics as Customaria moves from a traditional economy to more of a market system.

Explanation / Answer

Wage inequality will increase.

Rate of economic growth will increase.

Variety of Goods and Services will also increase.

Technology is the major change from traditional to market system. As technology evolves, it requires familiarization and re education to adopt it. So, initially it increase wage inequality because of low tchnical skill.

With better technology, produciton increases and hence rate of economic growth.

Also a large variety of Goods and Services will be availbale.

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