# Macroeconomics with Connect Plus

## Quiz 3 :Economic Institutions

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Is capitalism or socialism the better economic system ? Why?
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Socialist economy is an economy where the market decisions like allocation and management of resources, production and sale of goods and services, etc. are decided by the society or the representatives of the society.
Market economy or capitalism is an economy where the private property laws are strong and market is governed by market forces to manage the market activities.
Even though it is said that socialist economy takes care of all, but it has been seen that capitalist economies have grown better and fast in comparison to socialist economies. The main reason behind that is socialist economies are inefficient, have misallocation of resources and is manipulated by decision makers for their personal gain. All these problems in socialism makes capitalism economically better.

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True or false ? As economic systems have evolved. There has been less need for planning.
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There has been a need of planning even though economic systems have evolved. Planning is an important aspect of economic development. Government planning guides economic activities in the appropriate direction. Whenever a downfall or recession occurs in the economy, planning becomes necessary. It is not possible for economic systems to solve problems related to market fluctuations without proper planning.
Planning plays an important role in many developed nations, like the United States, though its economic system is evolved. Economic planning provides the proper framework for the functioning of market forces. All the major decisions related to the market expansion are made by economic planners in many countries, though their economic systems have evolved.Hence, the statement, "As economic systems have evolved, there has been less need for planning", is false.

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Discuss the concepts of market failure and government failure in relation to operas.
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Market failure is an economic situation in which market forces fail to deliver a desired result. Inefficient allocation of resources leads to market failure. When the market forces of demand and supply do not coordinate properly with each other, it leads to market failure. Market forces do not respond to the operas since profitability is not present.
Government failure occurs when the intervention of the government causes market failure. It is a situation in which the government interferes in the market, causing the failure of the market. The intervention of the government in an opera leads to its failure considering profitability.

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How does a centrally planned socialist economy solve the what, how, and for whom to produce problems?
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Why does an economy's strength ultimately reside in its People?
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The text discusses consumer sovereignty and suggests that it guides the marker choices. a.Is consumer sovereignty a myth or reality in today's consumer culture? b.Do consumers "direct" the economy as suggested by the text, or has invention become the mother of necessity, as Thorstein Veblen once quipped? c.If the consumer is not sovereign, then who is and what does that imply for economics?(Radical)
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In economics, a household is defined as a group of individuals Making joint decisions as though acting as one person a.How do you think decisions are actually made about things like consumption and allocation of rime with in the household? b.Does bargaining rake place? c.If so, what gives an individual power to bargain effectively for his or her preferences? d.Do individuals act cooperatively within the family and competitively everywhere else? e.Does this make sense? (Feminist)
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How might individuals disagree about the government's role in intervening in the market for merit, demerit, and public goods?
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What arguments can you give for supporting a socialist organization of a family and a market-based organization of the economy?
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This chapter emphasized the importance of the relationship between how the economic system is organized and value systems. Knowing that how I raise my child will greatly shape how he or she will ultimately fit into the social and economic process. should I raise my child to be selfless, compassionate. and dedicated to advancing the well-being of others, knowing she will probably be poor; or shall l raise her to be self-centered. uncaring. And greedy to increase her chances to acquire personal fortune? 'Which decision is just and why? (Institutionalist)
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In his The Social Contract , Jean-Jacques Rousseau argued that "no State has ever been founded without a religious basis (burl the law of Christianity at bottom does more harm by weakening than good by strengthening the constitution of the State." What does he mean by that. and is he correct? (Religious)
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A marker system is often said to be based on consumer sovereignty-the consumer determines what's to be produced. Yet business decides what's to be produced. Can these two views be reconciled? How? If not, why?
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Go to a store in your community. a.Ask what limitations the owners faced in starting their business. b.Were these limitations necessary? c.Should there have been more or fewer limitations? d.Under what heading of reasons for government intervention would you put each of the limitations? e.Ask what kinds of taxes the business pays and what benefits it believes it gets for chose taxes. f.Is it satisfied with the existing situation? Why? What would it change?
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In a market economy. what is the central coordinating mechanism?
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Economists Edward Lazear and Robert Michael have calculated that the average family spends two and a half times as much on each adult as they do on each child. a.Does this mean that children are deprived and that he distribution is unfair? b.Do you think these percentages change with family income? If so, how? c.Do you think that the allocation would be different in a family in a command economy than in a capitalist economy? Why?
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Friedrich Hayek, the man quoted at the start of the chapter, is an Austrian economist who won Nobel Prize in economics. He argued that government intervention is difficult to contain. Suppose central planners have decided to financially support all children with food vouchers, free day care, and public school. a.What problems might this create? b.How might this lead to further interference by central planners into family choices? (Ausman)
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Tom Rollins heads a company called Teaching Co. He has taped lectures at the top universities, packaged the lectures on DVD and CD, and sells them for $90 and$150 per eight-hour series. a.Discuss whether such an idea could be expanded to include college courses that one could rake at home. b.What are the technical, social, and economic issues involved? c. If it is technically possible and cost-effective, will the new venture be a success?
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One of the specific problems socialist economies had was keeping up with capitalist countries technologically. a.Can you think of any reason inherent in acentrally planned economy that would make innovation difficult? b.Can you think of any reason inherent in a capitalist country that would foster innovation? c.Joseph Scbumperer, a famous Harvard economist of the 1930s, predicted that as firms in capitalist societies grew in size, they would innovate less. Can you suggest what his argument might have been? d.Schumperer's prediction did not come true. Modem capitalist economies have had enormous innovations. Can you provide explanations as to why?
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