It is true that Indian economy has moved from socialism with restricted entry to “marketism” without exit form the former. The lack of exit from socialism creates at least three types of costs, which of the following cost is not associated with this:
A. Fiscal Cost
B. Opportunity Cost
C. Economic Cost
D. Political Cost
Answer:B
It is true that Indian economy has moved from socialism with restricted entry to “marketism” without exit form the former. The lack of exit from socialism creates at least three types of costs, which of the following cost is not associated with this:
A. Fiscal Cost B. Opportunity Cost C. Economic Cost D. Political Cost
Explanation: Fiscal Cost is an increasing function of the taxes that will have to make up for the lost revenue, and/or the general equilibrium effects of greater deficits, via the greater interest costs and reduced private sector investment activity that result if the government borrows to finance the foregone revenue. Economic losses result from resources and factors of production not being employed in their most productive uses. The lack of exit can also have considerable political costs for governments attempting to reform the economy. The benefits of impeded exit often flow to the rich and influential in the form of support for "sick" firms.