In: Economics
SHORT ANSWERS
a. How do we evaluate outcomes of economic systems? State the five performance criteria and briefly explain each.
b. Describe the feudalist economic system. What were its main characteristics? Why did it collapse?
c. Describe the EFO model. How does it work? What were the reasons for its implementation? What is its underlying purpose? Make sure you clearly explain how the mechanism works.
ESSAY TOPICS
A. Market failures are considered a weakness of the capitalist economic system. What are the four major market failures we have covered in class? Explain each in detail and give a brief example of how a government would remedy each particular market failure.
B. Describe the Japanese bubble economy in the 1980s. What caused it? What were the main characteristics of the bubble? Why did the bubble burst and what were the main consequences?
C. Describe the theoretical framework of socialism. How did socialists deal with the allocation of resources? How were prices established? What kind of information does a central planning board need to have for an efficient allocation of resources?
A.
Economic systems are meant to run and develop the economy that leads to efficient utilization of scarce resources to maximize the productivity while improving the well-being of the different players of the economy. So, outcome of the each economic system is evaluated. The evaluation criteria involve the review of the impact of economic system upon different sectors of the economy. It involves comparison of the well-being of the people, regulatory framework developed to protect the interest of consumers and smaller firms and the promotion of private rights among the others. Besides, the roles and responsibilities of the governing authorities are also evaluated. There are different performance criteria as follows:
1. The GDP growth rate that measures the growth in output and production as it shows the position of aggregate demand and supply in the economy.
2. Real income growth that shows the growth in income of the people that is adjusted against the inflation in the economy. It shows the real trend whether the purchasing power is growing or decreasing.
3. Employment rate in the economy that is the result of practices and policies to be followed in the economy. A sound economic system will deliver higher employment rate and people will have a superior disposable income.
4. Superior life expectancy that explains the amenities and health care available to the individuals as superior benefits will lead to superior life expectancy and quality of life.
5. Development of human capital that explains the focus of economic system. A growing human capital involves building a intellectual pool that helps in innovation and technological development other than providing the superior skilled workforce.
Above criteria should be applied to evaluate the economic system.
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