Answer to Question #287567 in Microeconomics for jyo

Question

Using examples of your choice, discuss whether the desirability of the worldwide movement towards the market economy and away from the planned economy

Answer 1

The profit motive and consumer sovereignty are important to the market economy, which has limited government intervention. It has performed better in terms of boosting living standards, economic development, and efficiency. More options and reduced pricing benefit consumers. Economic plans and large-scale government intervention were used to operate planned economies. Low living standards resulted, despite the fact that employment was frequently available and a basic quality of life was achieved. The transition to market economies resulted in both winners and losers. Russia shows how the number of millionaires has risen as unemployment and poverty have increased. Some East European economies are booming, while others in the former Soviet Union are faltering.

For example, consider the case of china.

The transition began at the end of 1978 and since the beginning of the transition, China's average annual rate of GDP growth has been miraculous and it has been the most successful transitions. Nonetheless, an increasingly significant "boom and bust" cycle has plagued the Chinese economy.