The Russian transition to a market economy with free labor markets and uncontrolled prices means that
A) prices will still be controlled by government.
B) full employment and low prices can be maintained.
C) wages will still be determined by government.
D) unemployment and higher prices are inevitable.

Question

Quizplus · Accepted Answer

The transition to a market economy with free labor markets and uncontrolled prices often leads to unemployment due to the restructuring of state-owned companies and the collapse of inefficient industries. This, in turn, can lead to higher prices as supply decreases. The government may not have control over prices or wages in a free market economy, and as a result, wages may also be affected. Therefore, unemployment and higher prices are likely to occur during the transition.

The Russian Transition to a Market Economy with Free Labor