Capital Markets- One of the most fundamental differences between a market economy and a centrally planned...

Capital Markets- One of the most fundamental differences between a market economy and a centrally planned economy is the absence of capital markets in the latter. Discuss the problems of a system without the capital markets. Focus on the role of the capital markets in the “life of a firm.”

Expert Solution

Problems of a system without the capital markets are illustrated by showing the role and importance of capital market. With the absence of capital markets in an economy these advantages will become drawbacks.

Capital markets allow for the businesses to raise long term funds for the firm.

It provides the public a platform for investing their savings in lucrative securities with probabilities of higher returns.

A properly structured and regulated capital market attracts foreign investment which helps in economic growth through foreign exchange reserves.

It helps diversification of business by expanding its operations and scope of business activities through availability of long term funds to finance the expansion.

Through different channels of communication the public are made aware of new investing opportunities and their existing investment’s current status and future forecast.

Capital market can be an indicator of the economic growth in an economy, through which the government can take necessary steps for better growth.

Rahul Sunny answered 2 years ago

Centrally planned economy and a market economy

Distinguish between a centrally planned economy and a market economy.

Compare and contrast the advantages and disadvantages of a centrally planned economy and a market economy....

Compare and contrast the advantages and disadvantages of a centrally planned economy and a market economy. Share real world examples

1. Distinguish between a Pure Market Economy and a Centrally Planned Economy. Discuss how both forms...

1. Distinguish between a Pure Market Economy and a Centrally Planned Economy. Discuss how both forms of economies deal with... (a) The problems of scarcity and choice. (b) The price mechanism. (c) International Trade.

Explain why a centrally-planned economy might not grow as rapidly as a market economy. 50 words...

Explain why a centrally-planned economy might not grow as rapidly as a market economy. 50 words minimum

The dominant economic models today are the capitalistic free-market system, the centrally planned economy, and the...

The dominant economic models today are the capitalistic free-market system, the centrally planned economy, and the mixed economy. Please describe each and highlight the similarities and differences among them.

In general terms, discuss how the change from a centrally planned economy to a more market-based...

In general terms, discuss how the change from a centrally planned economy to a more market-based economy has affected career options and standards of living for the elderly, for young professionals, for unskilled laborers, for members of the military, for women, and for former government bureaucrats.

Imagine that Canada did not have a market-based economy, but instead had a centrally controlled, planned...

Imagine that Canada did not have a market-based economy, but instead had a centrally controlled, planned economy. So, instead of letting private businesses make decisions about what to make, these are all made by government-controlled manufacturers and producers. You are one of the central planners, in charge of making decisions about what the government should produce. Your focus is on clothing. Explain the information you would need to know to improve the social efficiency of the clothes that are produced....

Imagine that the leaders of a poor nation with a centrally planned economy become willing to...

Imagine that the leaders of a poor nation with a centrally planned economy become willing to try a different economic system, and hire an economist from a rich, market economy nation to advise them. The economist recommends a switch to a market economy. What will the economist suggest the leaders order their citizens to do?

One of the biggest problems with centrally planned economies is that ... a. demand curves are...

One of the biggest problems with centrally planned economies is that ... a. demand curves are inelastic b. then typically have higher levels of corruption compared with market economics c. central planners have limited information on the true value of the various ways to utilize scarce resources d. they fail to reach economic efficiency because their policies limit global trade

Provide an outline for your “optimal” plan for economic reform for a centrally planned economy. Provide...

Provide an outline for your “optimal” plan for economic reform for a centrally planned economy. Provide a brief indication of the reason for your choices.

Question