Central Planning Proved to Be a Failure in Communist Countries

question 50

Multiple Choice

Central planning proved to be a failure in communist countries in part because of:

• A) abundant market information.
• B) unquestioned reliance on the price system.
• C) insufficient use of government ownership.
• D) inadequate rewards for innovation.

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Definitions:

Tax Shifting

Occurs when households can alter their behavior and do something to avoid paying a tax.

Avoid Paying

Strategies or actions taken to minimize or evade expenses, taxes, or other financial obligations.

Luxury Tax

A tax imposed on expensive goods and services, often considered non-essential, as a means of raising government revenues without placing the burden on essential items.

Tax Incidence

The distribution of the economic burden of a tax between buyers and sellers, depending on the elasticity of demand and supply.