Economic Historians Have Pointed to Which of the Following to Explain

question 21

Multiple Choice

Economic historians have pointed to which of the following to explain the demise of the Soviet Union?
I. Managers were evaluated based on profits rather than production quotas.
II. There was misallocation of investment, with "prestige" sectors chosen over less productive ones.
III. Planners emphasized the short run over the long run.

• A)I only
• B)II only
• C)III only
• D)II and III

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Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Loanable Funds

The money available for borrowing in the financial markets, corresponding to savings that are lent out for investment.

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of spending but are willing to accept less liquidity for a higher return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.