Chapter 29: Problem 2

Command economies typically suffer from a. unemployment, but not underemployment. b. neither unemployment nor underemployment. c. both unemployment and underemployment. d. underemployment, but not unemployment.

Short Answer

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c. both unemployment and underemployment

Step by step solution

Understand the characteristics of command economies

A command economy is an economic system where the government controls and plans the production, distribution, and allocation of resources. This type of economy can also be referred to as a centrally planned economy. The government sets the goals, targets, and priorities for the economy, and it makes decisions based on these criteria.

Understand unemployment and underemployment

Unemployment refers to the situation where people are willing and able to work but cannot find jobs. Underemployment, on the other hand, occurs when people are employed, but their jobs do not utilize their full skills or abilities, or when they are not working enough hours to earn a sustainable income.

Analyze how command economies affect unemployment

In a command economy, the government controls the labor market, deciding how many jobs are created and where they will be located. This can lead to inefficiencies and misallocations of resources. As a result, there may be a mismatch between the skills of the workforce and the available jobs. This can lead to unemployment, as some people are unable to find jobs that match their skills and abilities.

Analyze how command economies affect underemployment

In a command economy, the government may prioritize certain industries or sectors, leading to the underutilization of the workforce. People might be forced to take jobs in sectors where they are not fully using their skills or education, or they might be working fewer hours than they would like, resulting in underemployment.

Choose the correct option

Based on our analysis of command economies and their effects on unemployment and underemployment, we can conclude that the correct answer is: c. both unemployment and underemployment In command economies, both unemployment and underemployment are typically present due to the government's control and planning of the economy, which can lead to inefficiencies and misallocations of resources.