In facilitating the transition from a centrally planned to a market-oriented economy, explain the difference between the "shock therapy" versus "gradualism" approach

What will be an ideal response?


The proponents of the "shock therapy" approach argue that the transition should be aggressive, quick, direct, and simultaneously impact all economic variables. In contrast, the "gradualism" approach recommends moderate and sequential changes over time starting with the development of market institutions, the gradual decontrol of prices, and the limited privatization of only the most cost efficient state-owned and operated businesses.

Economics

You might also like to view...

An example of a market-facilitating legal practice is

(a) clearly established property rights. (b) corruption of government officials. (c) extensive licensing requirements for starting firms. (d) all of the above. (e) none of the above.

Economics

Since 1980, _____ has experienced deflation. a. the U.S

b. France c. Germany d. Japan e. Italy

Economics

Which of the following paired concepts are equivalent to each other?

a) increasing returns; diseconomies of scale b) increasing returns; increasing costs c) increasing returns; decreasing costs d) increasing costs; economies of scale e) constant costs; economies of scale

Economics

Decreases in the stock of capital will lead to:

A. increases in wages and total GDP. B. decreases in wages and increases in GDP. C. increases in wages and decreases in GDP. D. decreases in wages and GDP.

Economics