The transition from government-controlled prices to market-determined prices in the former communist countries would be expected to result in:
A) Price stability
B) Price deflation
C) Price inflation
D) None of the above

Question

Quizplus · Accepted Answer

The transition from government-controlled prices to market-determined prices would likely result in price inflation in the former communist countries. This can be attributed to the fact that market prices are determined by supply and demand, which could lead to an increase in demand without a corresponding increase in supply initially, leading to higher prices. Additionally, the removal of price controls could lead to an increase in prices for goods and services that were previously subsidized or artificially low under the previous system.

The Transition from Government-Controlled Prices to Market-Determined Prices in the Former