The problems encountered by transitional economies trying to become well-functioning market economies involve:
A) eliminating bank checking accounts in favor of paper currency.
B) taking steps to reduce the inflation rate.
C) reducing private property rights.
D) eliminating all welfare programs and social safety nets.

Question

Quizplus · Accepted Answer

One of the major problems of transitional economies is high inflation rates due to years of government control and mismanagement of the economy. Therefore, reducing inflation rate is a crucial step for a successful transition to a market economy. Eliminating bank checking accounts in favor of paper currency (A) is not necessary for a functioning market economy and may even create more problems. Reducing private property rights (C) goes against the principles of a market economy and would likely discourage investment and economic growth. Eliminating all welfare programs and social safety nets (D) could lead to social unrest and instability, and is not a necessary step for a functioning market economy.

The Problems Encountered by Transitional Economies Trying to Become Well-Functioning