1. In the Soviet Union and prereform China:
A.both consumer and capital goods outputs were determined by central planning.
B.both consumer and capital goods outputs were determined by the market.
C.capital goods output was determined by planning, but consumer goods output was determined by the market.
D.consumer goods output was determined by planning, but capital goods output was determined by the market.


2. Soviet and prereform Chinese industrial enterprises historically were:
A.self-financing corporations.
B.government-owned monopolies.
C.employee-owned state businesses.
D.privately owned, but governmentally managed firms.


3. Soviet growth in the 1950s and 1960s was achieved primarily by:
A.increasing the productive efficiency of inputs.
B.using more inputs.
C.encouraging foreign private investment.
D.shifting resources from the military sector to the civilian sector.


4. A major economic implication of the emphasis on economic self-sufficiency in the centrally planned economies of the Soviet Union and pre-reform China was that:
A.their price levels were lower than they would have been otherwise.
B.unemployment was greater than it would have been otherwise.
C.potential income gains based on free trade were sacrificed.
D.technological advance was greater than it would have been otherwise.


5. "Under central planning, some group has to decide how to get the necessary inputs produced in the right amounts and delivered to the right places at the right time. This is a nearly impossible task without markets and profits." This quotation best identifies the:
A."incentive problem" under central planning.
B."coordination problem" under central planning.
C."self-sufficiency dilemma" under communism.
D."resource overcommitment problem" under communism.


6. Shortages and unmet demand provide opportunities for individuals and firms to profit under capitalism, but they present no such opportunities under central planning. This reality represents central planning's:
A."incentive problem."
B."coordination problem."
C."paradox of value."
D."X-efficiency problem."


7. Innovation lagged in the centrally planned economies because:
A.there was little or no domestic business competition.
B.there was little or no competition from foreign firms.
C.enterprises resisted innovation in fear that their production targets would be raised.
D.of all of the above reasons.


8. Workers in the Soviet Union and prereform China were not motivated to work hard because:
A.the Communist Party set strict limits on production rates.
B.higher money incomes did not translate into more consumer goods.
C.the income tax was confiscatory.
D.the prices of consumer goods were market determined while wages were government determined.


9. Government price fixing for basic consumer goods in the Soviet Union established prices:
A.at the equilibrium level.
B.below the equilibrium level.
C.above the equilibrium level.
D.which were closely related to the relative scarcity of each good.


10. If products were in short or surplus supply in the Soviet Union:
A.price and profit signals eliminated those shortages and surpluses.
B.price and profit signals intensified those shortages and surpluses.
C.producers would not react because no price or profit signals occurred.
D.none of the above would occur.


11. As it relates to reforms in Russia "privatization" refers to:
A.Soviet consumer cooperatives.
B.the decontrol of prices.
C.the sale of public property to private buyers.
D.the "demonopolization" of Soviet industry.


12. Opening the Russian economy to world trade:
A.has increased competition in the Russian economy.
B.has resulted in income gains because of trade based on comparative advantage.
C.required that the ruble be made convertible.
D.has involved all of the above.


13. A major problem in Russia's economic transition has been:
A.massive unemployment.
B.a very slow rate of privatization.
C.declines in real output.
D.the failure to decontrol prices.


14. The special economic zones in China:
A.resulted in "near capitalism" in these regions.
B.were established mainly in rural inland regions.
C.were first established by Jiang Zemin after Deng Xiaoping's death in 1996.
D.were largely based on Marxian principles.


15. China's economic reforms have:
A.been gradual compared to Russia's.
B.put democratization before economic reform.
C.privatized all state-owned enterprises.
D.slowed considerably in recent years.



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