Prior to the Collapse of Communism,communist Countries Worked on the Premise

question 114

Multiple Choice

Prior to the collapse of communism,communist countries worked on the premise that economic well-being could be best attained by

• A)a market economy.
• B)a strong reliance on prices and individuals' self-interests.
• C)a system of large, government-operated, privately-owned firms.
• D)the actions of government central planners.

---

Definitions:

Nominal Interest Rate

The interest rate stated on a loan or investment agreement, not adjusted for inflation, reflecting the gross interest per period.

Real Rate

The interest rate adjusted for inflation, reflecting the actual purchasing power of interest earnings.

Real Rate

The interest rate adjusted for inflation, reflecting the true cost of borrowing or the real yield on an investment.

Inflation

A rise in the general level of prices in an economy; an increase in an economy’s price level.