Comparative Econ Systems Final
What are schumpeters ideas?
- Dynamics of capitalist economies - capitalism will be replaced by socialism - driving force of evolution in capitalist is development and new products/ideas (creative destruction) - competitive advantage is short lived - views capitalism in terms of concentration
Material balance planning How it works
- central planning board specifies list of goods and services to be produced in period - CPB determines inputs (Land, labor, capital) needed for one unit of output - balance input/output - supply = production, stocks on hand, import - demand = inter-industry; final demand - X1 + V1 + M1 = X11 + X12 + ...+ X1n + Y1 derive amount from previous years planning experience and adjusted
Why is China considered a market socialist system?
- has state ownership - has market allocation
Keynes approach to Macroecon equilibrium
- need active government to stabilize and reach full employment - should raise/lower spending/taxes (fiscal) or control investment spending (monetary policy) - say's law = no lasting deficiency of demand bc producing given value creates equivalent amount of income
What are Hayeks ideas?
- planning leads to political dictatorship - economic institutions rise from spontaneous order - Darwinian manner: those that work stay and those that don't leave e.g. - corporations rose to raise capital - unwritting and written info passed on - from human action NOT human design - positive relationship between democracy and free market - CPB is unmanageable in practice - state ownership = political totalitarianism
What are reasons why output collapsed in transition countries?
-Supply Shocks (inflation, end of subsidies, price change, budget constraints, shortage) -Demand Shocks - market symbols weak - cmea shock = decline in trade - decline in investment - structural adjustment - failure to provide needed institutional change -disorganization
Shock therapy vs. gradualism
1. Immediate; replace old order with new - cause sharp economic collapse - Poland, central Europe 2. slow change, first economic then political - learning and adaptation - from western industrial economies - spread out; less painful; avoid collapse; takes longer
What is a form of social control over monopoly?
1. tax and subsidize; force monopolists to expand output. Problem = tax calculations 2. direct regulation - make them produce at MC = P. Problem = cannot know exact market demand and MC of monopoly 3. Leave monopolies alone (Freedman) 4. use anti-trust and anti-cartel legislation to remove obstacles
A production function elaborates 1.the relationship between inputs and output. 2. the difference between long-term and short-term plans. 3. the relationship between consumption and income. 4. all of the above.\
1. the relationship between inputs and output
Corporations Advantages Disadvantages
A 1. owners (stockholders) are not personally liable for debt of corporation 2. management can be changed 3. more options of raising capital D 1. income is taxed a second time when corporate earnings are distributed to stockholders as dividends
Choose which of the following is a main explanatory force in modeling transition? a. Initial conditions. b. Policy measures. c. Environmental factors. d. Inflation.
A, B, C
** look at theoretical foundation of Marx, ideas of Schumpeter (creative destruction) Q: similarities and differences in terms of predictions of evolution of capitalism capitalist should by; diff approaches
Capitalism is an unstable economic system; has limited lifespan economic forces determine how production relations, markets, and society are organized productive forces improve; new and old economic/social/cultural relationships have tension and conflict slavery -- feudalism -- capitalism -- socialism capitalism emerges by accumulation of capital and formation of "free" labor force created class conflict - working class and capitalist capitalist profits = surplus that works create cut throat competition want to maximize profits and accumulate more capital out of profits cost-saving innovations; attract customers with lower prices; temporary increase in profits above "normal" level as profit declines, substitute captial for labor; cause more decline in profit profits decline - in attempt to stop this, capitaliss exploit/alienate workers; leads to failure of marginal businesses and bankruptcy employers are not raising wages demand falls below supply = recession and then depression lower profits leads to lower investments and more shortfall in demand final stages of capitalist breakdown = overproduction, underconsumption, disproportions, exploitation of workers, overthrow of capitalism Schumpeter 64-65, 108-109 need to study how an organization comes into being; how it evolves over time driving force of evolution in capitalism = development and implementation of new products, new ideas, and new ways of doing things carried out by entrepreneurs, driven by profit = creative destruction competitve advantages would be short lived view capitalism in terms of concetration. concentration leads to routinization of entrepreneurial spirit and lack of social willingness to reward risk takers this would cause decline of capitalism Similarities both viewed capitalism as having limited lifespan; both thought it'd be replaced by socialism importance of classes cyclical nature of economic activity role of profit tendency for profit rates to decline Differences schumpeter focuses on innovative power of capitalism and how to preserve innovation marx
** main difference between socialist and capitalist economic systems
Capitalism: efficiency - good stability - potentially poor, debate over government role income distribution - unequal in absence of state action economic growth - no clear a priori hypothesis; greater efficiency vs. potentially lower capital formation viability - shows viability in last few centuries Planned Socialism: efficiency - low stability - high income distribution - fair economic growth - relative growth viability - low in the long run Capitalism private onwership; decision making is decentralized; use market mechanism; motivate peopel with material incentives; democratic political institutions Planned Socialism public ownership of factors of production; decision making is centralized and coordinated by central plan; use moral and material incentives; public choices made by dictator Market Socialism public ownership; decision making is decntralized; coordinated by market mechanism; use material and moral incetnives to motviate participants
What was China's privatization process?
Delay until recently of privatization of large-scale industrial enterprises - 1st phase (1978): spontaneous privatization of service sector - 1995: transfer rights to managers; (but backed by the state) - started with smaller companies; held off on larger till later
Who stated chinese economic reforms?
Deng - created commercial banks - privatized small and medium industries - opened economy to world products
What is mercantilism?
Economics must be regulated by the state to prevent loss of resources to rival nations - started in France - 16th - 18th century - opposite of invisible hand - folk doctrine; no organized opposition - state collected revenue by selling licenses, charters, and other monopoly rights
what does universal bank mean?
European banks - perform functions of traditional banks, risk-sharing, stock sales, and merchant-banking functions
cooperative model market socialism
Firms are managed in participatory fashion by people working in them - equal income for labor of equal intensity and labor - resources are state owned but managed by workers
** textbook - great britain = market capitalist economic system - some say GB = socialist economic system - what historical structural and organizational features of GB system make classification so difficult?
GB has both Anglo-Saxon model (historical source of model) and European model anglo saxon: individuals have economic liberty to pursue profits and self interest; little government role uses common law (custom, usage, court decisions) european model: believes state is needed to promote welfare used in England in 16-18th centuries; regulation over business and commerce; state collected revenues (sold licenses, charters, monopoly rights) uses civil law (code based legal system) UK uses common law, not civil law GB had many public enterprises, but only small part of GDP went through privatization under margaret thatcher has a market economy; government plays a huge role in it; little planning is done Anglo-Saxon model calls for limited role of government and protection of private property GB has strong government involvement and more public ownership (than the US)
What is the name of the planning agency in Soviet Union?
Gosplan
** market efficiency + democratic public choice 1. government build road and people should vote 2. is always efficient from market view? 3. look at cost benefit point of view
Hayek pubic goods (national defense, police protection, legal system, etc.) will not be supplied efficiently by private economy 1. non-payers (free riders) overuse AND one's use of goods does not prevent others from using good Not all democratic choices are efficient; efficiency - Marginal benefits > marginal cost for users problems: 1. majority voting: voting doesn't take in intensity of preferences 2. trading vote; one group may incentivize others to vote for their side voters have little incentive to be well educated about public choice issues feel their votes will not have much weight therefore, government authorizes programs that are not economically efficient due to logrolling, vote trading, and rational ignorance
Who supports cooperative model?
Jaroslav Vanek - important for people to participate in decision making 1. firms managed by ppl working in them 2. income sharing will prevail 3. workers do not own and must pay for use of productivity resources 4. market economy (planning is only used through indirect mechanisms) 5. freedom of choice in employment Benjamin ward?
** describe lange model
Oskar Lange (polish economist) - trial and error model: use of general equilibrium framework; approach solution through number of sequential stages - form of planned economy; CPB allocates investment and capital goods with markets reserved for labor and consumer goods - CPB simulates a market in capital goods through trial and error process -lange model - indirect usage of the market - model has 3 levels of decision making: lowest = firms and households; intermediate = industrial authorities; highest = Central Planning Board - means of production (except labor) are state owned; consumer goods are allocated by the market - Steps of decision making 1. CPB sets prices of producer goods 2. producing firms to produce at price = marginal cost and minimum cost 3. households choose how much labor to supply - CPB sets prices randomly, so if there's no balance then... excess supply - price would be lowered by CPB excess demand - price would be raised by CPB - CPB allocates social dividends (rent and profit) earned by state owned companies - distribution of social dividends could be in form of public services and investment - investment funds should equal marginal rate of return Advantages of lange model: rate and direction of economic activity is determined by state - rate of economic growth would be state-determined due to investment ratio being one of its major determinants distribution of income would be more even mix of output would be different externalities could be better accounted for because state could manipulate resource prices since state uses P = MC and determines entry, monopolies and other source of lack of allocative and production efficiency can be avoided state control would reduce cyclical instability - state controls savings and investment; eliminates source of inefficiency, inequality and social instability Disadvantages CPB would lead to large bureaucracy no way to ensure managerial motivation no workable incentive structure possibility of monopolistic behavior
What does optimal plan mean? How you can achieve results and is it visible or not?
Planners want balance at highest level - but closer targets are to maximum capacity = more likely to have errors and imbalances - optimal = balance at highest possible level of output
** difference between economic system + economic policy
Set of institutional arrangements used to allocate scarce resource - institutions define ES - what to produce, how, for whom - feud, capital, soc, comm - consist of mechanisms, organizational arrangements, and decision-making rules; multidimensional - 5 types: structure, market and plan, control and income, incentives, the role of the government - cannot be altered without changing ES Something that changes without changing the underlying economic system example: whether an economy must be open or closed is policy
islamic principles in economics; countries who follow those principles
Tied to religion - Quran; shariah prohibition of interest; zakat; islamic moral norms 1. unjust to earn money without risk; have own financial tools - trade with mark-up or cost-plus sale 2. gov run in Yemen, Saudi Arabia, Pakistan, Sudan, Malaysia, Libya); doesn't decrease poverty; corruption 3. charge fair prices, provide accurate information, not engage in fraud or deceit Pakistan, Saudi Arabia, Iran, Turkey, Malaysia, Sudan, Libya, Yemen
What is a production function? What does it show?
Y = F(K,L) quantity of output a company can produce as function of its input - relationship between capital, labor - output and input
Which of the following statements is true about Mercantilism a. A strong state is needed to regulate and control the economy. b. Adam Smith was the intellectual founder of Mercantilism. c. Individual economic freedom, property rights, and private contracts are more important than the interests of the public. d. There are no universal principles of economics.
a. A strong state is needed to regulate and control the economy.
An employee buyout refers to a. arrangements through which employees of an enterprise can buy shares in that enterprise. b. arrangements whereby one enterprise can purchase another enterprise. c. corporatization. d. all of the above.
a. arrangements through which employees of an enterprise can buy shares in that enterprise.
Data presented in chapter 13 on the growth of output, inputs, and factor productivity show that for pre-Gorbachev era a. as a whole, inputs did not grow at significantly different rates in East and West. b. output grew more rapidly in the East and inputs grew less rapidly in the East. c. output grew more rapidly in the West and inputs grew less rapidly in the West. d. labor grew more rapidly then capital in both East and West. e. none of the above.
a. as a whole, inputs did not grow at significantly different rates in East and West.
Most companies in China receiving funding through a. banks loans. b. government investment. c. foreign investment. d. stock markets.
a. banks loans.
There are 2 major fundamental issues that drive privatization. these issues are a. equity and efficiency b. short-term stability and long-term economic growth c. fiscal policy and monetary policy d. none of the above
a. equity and efficiency
According to the text, market socialism is often said to be an attractive economic system because a. has no single or dominant theoretical paradigm. b. is based solely on the cooperative variant. c. is based solely on the Lange model. d. all of the above.
a. has no single or dominant theoretical paradigm.
Many economists have argued that during the early stages of transition in planned socialist system, output will a. increase rapidly. b. increase slowly. c. decrease. d. be unpredictable
a. increase rapidly
In the industrialized capitalist systems, taxes as a percentage of gross national product have a. increased. b. decreased slightly. c. decreased greatly. d. remained the same.
a. increased
Hayek and Mises argued that the greater efficiency of capitalism is due to a. its efficient generation and utilization of information. b. its efficient generation of perfect competition. c. its moral superiority. d. its lack of specialization. e. none of the above.
a. its efficient generation and utilization of information.
In recent years, much FDI has taken place in teh form of a. multntionational enterprises b. private investment c. leans by IMF and world bank d. loans by banks of other countries e. a and c are correct
a. multinational enterprises
one form of privatization is to restore property rights to the owners a. restitution. b. de novo privatization. c. outsider privatization. d. the voucher system. e. none of the above.
a. resitution
A major problem for the implementation of privatization during the early years of transition in the formerly planned socialist economic systems has been a. the absence of well-developed capital markets. b. the influx of foreign direct investment beyond tolerable limits. c. the ease of valuing property such that there is a large backlog of firms awaiting d. privatization. e. none of the above.
a. the absence of well-developed capital markets.
A major feature of the privatization process in China has been a. the delay, until recently, of the privatization of large-scale industrial enterprises. b. the delay, until recently, of any privatization in agriculture. c. the immediate and simultaneous privatization of all sectors of the economy d. beginning in 1993. e. none of the above.
a. the delay, until recently, of the privatization of large-scale industrial enterprises.
over the past decade, capital outflows in many transition economies a. varied from country to country b. have a postiive trend on average c. take the form of FDI d. exclude aid form organizations such as IMF and World Bank e. a, b, c are correct
a. varied from country to country
In the input-output model, the technical coefficients (aij) represent a.the amount of i needed to produce a unit of j. b. the output of i. c. the input of j. d. none of the above.
a.the amount of i needed to produce a unit of j.
What of the following is true about government balance in macroeconomic balance equation? a. Government balance can occur in the presence with inflation. b. Government balance is the difference between taxes (revenue) and expenditures. c. In transition economies, pressures on T and G resulted in a budget deficit. d. b and c are correct. e. a, b, and c are correct.
b. Government balance is the difference between taxes (revenue) and expenditures.
Which of the following was not a factor contributing to high growth in East Asia? a. export-led growth. b. import-substitution. c. high levels of human capital investment. d. high levels of foreign investment. e. all are correct.
b. import substitution
Import substitution consists of policies which a. favor state-owned industries. b. install tariffs. c. create barriers to trade. d. are generally outward-looking
b. install tariffs
The gradualist approach believes that institutional change is a. a random walk b. path dependent c. guided by policy makers d. none of the above
b. path dependent
Underemployment generally refers to a situation wherein a. people who are willing to work are unable to find job. b. people who are working on a full-time basis nevertheless utilize their skills at less than full potential. c. a large proportion of the labor force holds two jobs. d. none of the above.
b. people who are working on a full-time basis nevertheless utilize their skills at less than full potential.
Neoclassical economics is based on the assumption that a. supply and demand are typically in a state of disequilibrium. b. producers seek to maximize profits and consumers seek to maximize utility. c. consumers wish to maximize the welfare of their neighbors. d. the invisible hand does not work. e. none of the above.
b. producers seek to maximize profits and consumers seek to maximize utility.
a policy used to counteract over-expansion of money is called a. budget-balancing b. sterlization c. monetary overhand d. the washington consensus e. none of the above
b. sterilization
Although one could dispute the idea of a "European Model" as a distinct framework for understanding the European economic experience, it is true that there are important similarities among the European economies. One important similarity is a. the very minor role played by the state in almost all cases. b. the importance of safety nets to provide income and employment security. c. the almost total absence of subsidization by the state. d. their common constitutional history. e. none of the above.
b. the importance of safety nets to provide income and employment security.
Mises's major criticism of socialism was that socialism a. is unfair to workers b. can generate rational factor prices but not rational consumer prices. c. cannot establish a system of relative scarcities. d. is biased in the direction of the too nearly equal distribution of income. e. none of the above.
c. cannot establish a system of relative scarcities.
The major problem Lange faced in formulating his model of socialism was a. the lack of computers in the early period. b. who should staff the CPB. c. how to make the task of the CPB manageable. d. the lack of motivation of capitalist managers in a capitalist state. e. all of the above.
c. how to make the task of the CPB manageable.
Sweden receives a great deal of attention from economists in part because a. it is an example of rapid growth under severe population pressure. b. it is an example of command planning. c. it is an example of market efficiency with socialist equity. d. none of the above.
c. it is an example of market efficiency with socialist equity.
Among major industrialized economies such as Japan, Germany, France, and the United Kingdom, taxes as a percentage of GNP are, in the USA a. very high b. high -greater than most countries. c. low relative to most other countries. d. none of the above.
c. low relative to most other countries
A major Soviet contribution to economic planning started in the 1920s was a.linear programming. b. Lange's two rules. c. material balances. d. the labor theory of value. e. all of the above.
c. material balances
The value of a "labor day" was calculated in the following way a. one labor-day equals average daily earnings in the industry. b. one labor-day equals average daily earnings in the nearest sovkhoz. c. one labor-day equals net farm income divided by total number of labor days. d. one labor-day equals gross revenues divided by total number of labor days.
c. one labor-day equals net farm income divided by total number of labor days.
From a traditional equality viewpoint, the government's involvement in an economy concerns a. distribution of state owned industries b. progressive labor laws c. progressive taxes d. redistribution e. a and b are correct
c. progressive taxes
Suppose, GDP is growing at 10% per annum, labor at 1% per annum, and capital at 10% percent per annum. The Capital/Output ratio is a. rising at 2% per annum. b. falling at 5% per annum. c. remaining steady. d. rising at 9% per annum. e. falling at 9% per annum.
c. remaining steady.
One feature that distinguish American policy toward monopoly from that of Western Europe is a. that natural monopolies in the US tend to be owned by the state. b. that Europe relies more on regulation than on ownership. c. the US decision to leave natural monopolies in the hands of private owners. d. American and Western European policies are the same.
c. the US decision to leave natural monopolies in the hands of private owners.
The main question in Lewis's two-sector model is what will cause a. industrial production to increase. b. keep wages even across agriculture and industry. c. the agricultural surplus to be transferred to industry. d. none of the above.
c. the agricultural surplus to be transferred to industry.
The techpromfinplan was a. the balance-of-payment plan. b. the plan of cash payments for the entire economy. c. the enterprise's binding economic plan. d. the wage plan. e. all of the above.
c. the enterprise's binding economic plan.
Hayek and Mises
capitalism develops institutions in efficient manner - Austrian economics school - socialism lacks information; plus created by human design not spontaneous order - single planning cannot plan all econ activity from the center
What did Marx think about the state under socialism?
capitalism replaced by socialism replaced by communism - comm = no markets or money socialism = state represents the mass and is non-coercive - state owns means of production + right to surplus; individuals expected to contribute according to capability - rewards based on contribution
What are mises ideas?
critic of socialism - it lacks market exchange; information for prices; property rights; over demand and waste resources - individuals are motivated by profit max; efficiency; and for individual not group
Under which of the following rules would socialist managers operate in a Lange system? a. Maximize revenue. b. Maximize revenue and set P=AC. c. Hold costs to a minimum while producing the planned outputs. d. Set P=MC and minimize costs. e. None of the above.
d. Set P=MC and minimize costs.
Which of the following statements is true about the views of New Institutional Economics? a. Institutional change depends on initial conditions that dictate a predetermined path. b. Institutions arise as from human design. c. Changes in institutions can be explained using standard microeconomic theory. d. We can explain changes in institutions by using the logic of economic rationality as reflected in self-interest. e. none of the statements is true.
d. We can explain changes in institutions by using the logic of economic rationality as reflected in self-interest.
Command economies typically devoted a large share of output to investment. According to data in this chapter, the general pattern for levels of investment in transition economies through the 1990's demonstrates a. an initial rapid decline in investment. b. differing experiences for each country. c. continued modest levels of investment for all transition economies. d. a and b are correct. e. a, b, and c.
d. a and b
The initial condition around the big push was a. that tranistion policies could be implemented rapidly b. that institutional change is path dependent c. that markets would naturall emerge from decentralization d. a and c are correct e. all are correct
d. a and c are correct
A form of social control over monopoly is a. government ownership. b. antitrust legislation. c. regulation. d. all of the above. e. none of the above.
d. all of the above
Bounded rationality refers to: a. the limits of information. b. the limits faced by decision makers. c. personal limitations. d. all of the above e. none of the above
d. all of the above
Ownership rights may affect economic outcomes because a. public and private owners may have different time preferences. b. public ownership may mean more attention to social rates of return. c. the distribution of income is affected by ownership arrangements. d. all of the above.
d. all of the above
Which of the following statements is not true about Marx's theory of capitalism? a. Labor is the sole source of surplus value. b. There is an inherent tendency in industry to substitute labor with fixed capital. c. Employers can compel workers to produce more then the value of their labor. d. All the statements are true.
d. all statements are true
An informationally decentralized system is one that a. processes and utilizes information inefficiently. b. processes and utilizes information at the lowest level in the organization. c. does not exchange information from lower levels to higher levels in the organization. d. both 2 and 3 are correct.
d. both 2 and 3 are correct
In the USSR, the plan target that was the most important to the enterprise manager was the a. profit target. b. value-added target. c. cost-reduction target. d. gross-value-of-output target. e. none of the above
d. gross-value-of-output target.
The liability-limited feature of a corporation a. explains why corporations so often produce shoddy, cheap products. b. puts the corporation at a disadvantage relative to the partnership. c. is not essential feature of the corporation. d. makes it easier for corporations to raise capital. e. explains why corporations have professional management
d. makes it easier for corporations to raise capital.
"Corporatizing" in China means a. the state selects managers, and owns some shares. b. management is independent for small business only. c. management is independent , the state owns all shares in the company. d. management is independent, the state owns some shares
d. management is independent, the state owns some shares
Which of the following are examples of Deng's reforms in China? a. The creation of commercial banks. b. The privatization of small and medium industries. c. Allowing farms to privately own farm equipment. d. Opening the economy to world product markets. e. All except "#3" are correct.
e. All except "#3" are correct.
Accession to the European Union is a common goal of many transition countries. This union a. requires membership in the WTO. b. requires membership in the NATO. c. is a monetary union. d. is a custom union. e. a and c are correct.
e. a and c are correct
Which of the following are examples of distortions in command economies toward foreign trade? a. state control of foreign trade. b. nonconvertible currency. c. barter trade. d. a and c are correct. e. a, b, and c are correct.
e. a, b, c are correct
which of the following caused rise in unemployment rates in transition countries? a. The imposition of hard-budgets. b. Decreased state employment. c. Job-quitters entry into the employment market. d. Decreased private employment. e. All are correct.
e. all are correct
Which of the folowing affect the balance of payments? a. current accounts b. capital accounts c. the balance between foreign trade supplied and demanded d. exchange rates e. all of the above
e. all of the above
Areas of Soviet economy in which market influences were important are a. the labor market b. the second economy c. the collective farm market. d. answers a and c are correct. e. answers a,b, and c are correct
e. answers a,b, and c are correct
Life expectancy in transition countries a. decrease dramatically after transition b. decreased dramatically and recovered modestly c. experienced both increased death rates and decreased birth rates d. a and c are correct e. b and c are correct
e. b and c are correct
In terms of production possibilities schedules (PPF), static efficiency is achieved when a. the economy is operative above PPF b. the economy is operating on the PPF c. the economy could increase output without increasing its inputs. d. the economy could increase its outputs only by increasing its inputs. e. both 2 and 4.
e. both 2 and 4
In the macroeconomic balance equation, the left hand side of the equation is a. saving b. gov balance c. private consumption d. foreign balance e. investment
e. investment
The basic Keynesian model is particularly applicable to situations in which the economy a. is at full employment. b. has very flexible wages. c. has low unemployment. d. is in equilibrium on the vertical portion of the Keynesian L-shaped aggregate-supply curve. e. none of the above.
e. none of the above
** Know how organization of foreign trade sector worked in SU
foreign trade was planned and executed by foreign trade monopoly - - decisions on what to trade, with whom, and by what terms were decided by 3 institutions - Ministry of Foreign Trade - centralized body concerned with issues of foreign trade planning; development of import/export plans, material supply plans, balance of payment plans - Bank of Foreign Trade - Foreign trade organizations: limit overall volume of trade to control influence of market forces on soviet economy only export what was necessary to pay for necessary imports - trades were negotiated for each trade deal with each partner = bilateral trading - SU trade rations declined; lower than world standards partially from SU's adverse position in world markets at the time - latter years: SU trade ratios increased; organizational changes aimed to make enterprises more responsive to world markets; changes in attitude toward trade (new interest in neoclassical trade theory) - showed more interest in participating in world trade arrangements and organizations
What was a planning target for soviet enterprises?
gross value of output target
size of shadow economy in transition countires
increased ins hare of shadow economy
what is measure of economic instability? (4)
inflation (price rising) unemployment underemployment (utilize skills below potential) length and severity of cycles
An example of a "liberal" economic reform is a. a fundamental change in the economic system. b. one directed at a single sector, such as agriculture. c. lifting barriers to trade. d. none of the above.
lifting barriers to trade
Concentration ratio what does 20 of 99 mean
most used measure of market power - percentage of industry sales accounted for by the X largest firms 20 companies account for 99% of industry sales
** difference between national economic planning and forecasting
national economic plan: mechanism to guide the activity of an economy through time toward the achievement of specified goals notion of control is important *attempts to alter the economy's direction of movement and change economic outcomes 2 types - indicative planning, directive planning forecasting: projections of future economic activity
property rights under capitalism
primarily private ownership
What is a specific feature of the Swedish economy?
put together socialist welfare system and capitalist efficiency
who are classical economists?
schumpeter hayek mises
what is a production possibility schedule?
shows that, given the resources, the system has a menu of production choices open to it - econ systems choose where to locate on schedule - capitalism - consumer-voter dominates choice - planned socialist = planners make decision
