A Problem Inherent in Centrally Planned Economies Is

question 137

Multiple Choice

A problem inherent in centrally planned economies is:

• A)households and firms make poor decisions in choosing how resources are allocated.
• B)there is too little production of low-cost, high-quality goods and services.
• C)production managers are more concerned with satisfying consumer wants than with satisfying government's orders.
• D)exports tend to exceed imports.

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Definitions:

Financial Investment

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land, or factories) or the building of such assets in the expectation of financial gain.

Certificate of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate, often issued by banks.

Opportunity Costs

The value of the best alternative that must be foregone as a result of choosing a particular option.

Forgoing

The act of giving up something, typically as a sacrifice or in order to choose another option.