Compare and contrast the institutions of a capitalist economy with those of a communist economy.
What will be an ideal response?
A capitalist economy is one in which the means of production are mostly owned and controlled by individuals. The allocation of resources and goods is governed by voluntary trade that takes place in markets. Capitalist economies are also characterized by transferable property rights. As a result, most economic decisions in a capitalist economy are decentralized. In contrast, the state tends to own the means of production in a communist economy. Further, many economic decisions are centralized, that is, they are made by government officials.
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In classical growth theory, if real GDP per person is above the subsistence level,
A) population grows and lowers real GDP per person to its subsistence level. B) the pursuit of profit will cause economic growth to accelerate. C) technological growth occurs and keeps real GDP per person above its subsistence level. D) the economy will keep growing without limit. E) None of the above is correct because the classical growth theory asserts that real GDP per person can never exceed the subsistence level.
If two or more markets are closely related,
A) a partial equilibrium analysis will tend to overstate the price impact of a supply shock. B) a partial equilibrium analysis will tend to accurately predict the price impact of a supply shock. C) a partial equilibrium analysis will tend to understate the price impact of a supply shock. D) they should be analyzed concurrently but using partial equilibrium analysis alone.