Question : 21.4   The Transition to a Market Economy 1) The tragedy of : 1381306

21.4   The Transition to a Market Economy

1) The tragedy of commons relates to the idea that

A) central planning sets all production targets.

B) all wages, prices, and interest rates are controlled by government.

C) collective ownership may not provide the proper private incentives for efficiency because individuals do not bear the full costs of their own decisions, but enjoy the full benefits.

D) central planning sets all distribution targets.

2) The tragedy of commons relates to the idea that

A) central planning sets all production targets.

B) all wages, prices, and interest rates are controlled by government.

C) common owned resources tend to be overused.

D) central planning sets all distribution targets.

3) The so-called tragedy of commons relates to the idea that

A) no one has an incentive to maintain collectively owned property.

B) collectively owned resources tend to be under used.

C) collective ownership provides the proper private incentives for efficiency because individuals bear the full costs of their own decisions and enjoy the full benefits.

D) central planning sets all production and distribution targets.

4) The Russian transition to a market economy required

A) controls over prices.

B) market-supporting institutions such as a developed banking system, functional financial markets, a code of commercial law, and developed processes for insurability of business activities.

C) controls over wages and interest rates.

D) controls planning overall production.

5) In a centrally planned economy,

A) unemployment has always been very widespread.

B) wages tend to be exceptionally high for low-skill jobs and low for high-skill jobs.

C) the labor market does not function freely and there is essentially no such thing as unemployment.

D) laborers have remained unemployed because of technology displacement.

6) Within a fully employed, centrally planned economy that provides basic housing, food, and clothing at very affordable levels for all,

A) there is no need for unemployment insurance, welfare, or other social programs.

B) there is a real need for government social welfare programs.

C) there is a need for government to permit market-determined prices.

D) there is a need for government to permit market-determined wages.

7) The Russian transition to a market economy with free labor markets and uncontrolled prices means that

A) prices will still be controlled by government.

B) full employment and low prices can be maintained.

C) wages will still be determined by government.

D) unemployment and higher prices are inevitable.

8) The transition to a market-oriented economy characterized by rising unemployment and higher prices suggests that

A) government must continue to centrally plan all resource allocations to production.

B) a social safety net including unemployment compensation, and food, clothing, and housing subsidies for those in need will be politically popular.

C) government must set wages, prices, and interest rates.

D) government must continue to centrally plan the distribution of all output into consumption.

9) Most authorities agree that the transition to a market economy can be achieved

A) without external financial and technical assistance.

B) only with forceful central planning by the government.

C) only with external financial and technical assistance.

D) only with government controls on wages and prices.

10) The transition from socialism to market capitalism by the shock therapy approach suggests that

A) the transition proceed immediately and impact all economic variables at once.

B) government always centrally plan the economy.

C) the transition be gradual with sequential changes in government controls, etc.

D) government always control wages, prices, and interest rates.