How Does Privatization Help Stimulate Gains in Economic Efficiency

question 84

Multiple Choice

How does privatization help stimulate gains in economic efficiency?

• A) It allows newly privatized firms to gain monopoly position in a particular industry.
• B) It provides incentives to new private owners to search for increases in productivity and to enter new markets.
• C) It encourages state control over price and production output.
• D) It raises barriers to direct investment by foreign enterprises.
• E) It results in reservation of heavy industry for state ownership and the increase of import tariffs.

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Definitions:

Investing Activities

Financial transactions related to the acquisition or sale of long-term assets and other investments.

Cash Flow

The net amount of cash being transferred into and out of a business, considered in terms of operating, investing, and financing activities.

Operating Activities

Business actions directly related to the production and delivery of goods and services, forming the primary revenue-producing activity of an entity.

Cash Flow Statement

A financial statement that tracks the flow of cash in and out of a business, highlighting its operating, investing, and financing activities during a specific period.