Question

Answer True or False:

1. Classification criteria for economic system include decision-making systems, mechanisms for information and coordination, incentive structures, property rights, and mechanisms for public choices.

2. All economic systems can be classified as market capitalism or centrally planned socialism.

3. Generally speaking, transition economies emerging from the former Soviet Union have done least well with transition, while those of Central and Eastern Europe have done the best.

4. Capitalism relies primarily on material incentives, while planned socialism and market socialism rely on both material and moral incentives.

5. Capitalism relies on a democratic process for public choice, whereas planned socialism relies on a dictatorial process.

6. In additions to the economic system itself, environmental factors and polices also affect economic outcomes.

7. Performance criteria used to evaluate economic outcomes include economic growth, income distribution (equity), economic efficiency, economic stability, and viability.

8. Growth of per capital GDP is most often used as a measure of economic growth, and inflation and unemployment rates are most often used as measures of economic stability.

9. It is generally understood that capitalist economies are less efficient than are planned socialist economies.

10. Although future growth estimates for transition economies vary widely, they are all positive and of a reasonable magnitude.

11. There is no evidence that capitalist economies are more viable than are planned socialist economies.

12. During the twentieth century, there were examples of transition from capital-ism to planned socialism, from planned socialism to market socialism, and from planned socialism to capitalism.

13. Economic transition from planned socialism to market capitalism requires a change in legal institutions, as well as in financial and economic institutions.

14. Capitalism is based on the foundation of private property ownership, econom-ic freedom, and the primacy of markets as the mechanism of economic coor-dination.

15. In their writings, Marx, Engels, and Lenin dealt with the fundamental question of how scarce resources were to be allocated during the socialist phase.

16. The Austrian economists Mises and Hayek argued that rational economic decisions regarding resource allocation would be impossible because of the absence of market-determined prices.

17. The concept of material balances formulated by Soviet economists in the 1920s focused on the need to determine and balance aggregate demand and supplies of basic industrial commodities without the use of markets.

18. The theory of planning stresses the formulation of a plan, but incentives often prevent the implementation of the plan.

19. Theoretically, one would expect more rapid economic growth, greater stabil-ity, greater efficiency, and a more equal distribution of income in planned rel-ative to market capitalism.

20. Market socialism is a system that combines social ownership of capital with market allocation.

Answer 1