Question

1. The term “corporatization” is often used in the former socialist economies to describe

   		changing the way assets are managed in industrial firms.
   		the creation of a corporate type of structure in industrial enterprises.
   		the development of a “hard budget constraint” in former socialist industrial enterprises.
   		none of the above.

1 points   

QUESTION 2

1. Contemporary market capitalist economic systems frequently pursue privatization through

   		a voucher system.
   		contracting.
   		mass privatization.
   		all of the above.

1 points   

QUESTION 3

1. There are two major and fundamental issues that drive privatization. These issues are

   		equity and efficiency.
   		short-term stability and long-term economic growth.
   		fiscal policy and monetary policy.
   		none of the above.

1 points   

QUESTION 4

1. A major problem for the implementation of privatization during the early years of transition in the formerly planned socialist economic systems has been

   		the absence of well-developed capital markets.
   		the influx of foreign direct investment beyond tolerable limits.
   		the ease of valuing property such that there is a large backlog of firms awaiting privatization.
   		none of the above.

1 points   

QUESTION 5

1. Privatization in transition economies is often justified on the grounds of increasing

   		efficiency.
   		attention to fiscal deficits.
   		expansion of the money supply.
   		none of the above.

1 points   

QUESTION 6

1. In the transition economies, auctions were used to

   		privatize state property.
   		create a corporate structure in formerly state-held enterprises.
   		expand the role of the state in the economy.
   		none of the above.

1 points   

QUESTION 7

1. In the transition economies, the development of private economic activity has generally been most rapid in

   		the heavy industrial sector.
   		the small business sector.
   		the foreign sector.
   		none of the above.

1 points   

QUESTION 8

1. From a traditional equity viewpoint, the government’s involvement in an economy concerns

   		distribution of state-owned industries.
   		progressive labor laws.
   		redistribution.
   		a and b are correct.

1 points   

QUESTION 9

1. One form of privatization is to restore property rights to the original owners. This is called

   		restitution.
   		de novo privatization.
   		outsider privatization.
   		the voucher system.

1 points   

QUESTION 10

1. The best example of a tool for rapid privatization is

   		direct sale.
   		auctions.
   		voucher method.
   		all the above.

1 points   

Answer 1

Q. 1

Corporatization is the method of reorganizing a Government owned entity into a legal entity. But the company will have only one shareholder and that is Government, such shares will not be sold publicly. The first step of enterprise reform is Corporatization is creation of a corporate type of structure in industrial enterprises.

Therefore Option 2 : the creation of a corporate type of structure in industrial enterprises is the answer.

Q. 2

Capitalism is a kind of economic system whereby firms and individuals have there own capital goods. The transactions are based on demand and supply which is known as market economy.

As all the options take back profit, Option 4 : All of the above is the answer.

Q. 3

Privatization means mobility of anything from public sector to private sector.  Privatization has been used by various countries in distinct ways with respect to its effect on various areas such as social cohesion, efficiency, equity and choice.

Therefore Option 1 : equity and efficiency is the answer

Q. 4

Privatization means mobility of anything from public sector to private sector. Transition economy deals with those economic activities which are regulated by State. While in market economy, privatization is feasible and easier to achieve, major difficulties in the privatization in transition has been the absence of well developed capital markets.

Therefore Option 1 : the absence of well developed capital markets is the answer

Q. 5

Privatization means mobility of anything from public sector to private sector. Transition economy deals with those economic activities which are regulated by State. In transition economies, privatization is just often justified on the grounds of increasing efficiency.

Therefore Option 1 : Efficiency is the answer

Q. 6

Privatization means mobility of anything from public sector to private sector. Transition economy deals with those economic activities which are regulated by State. In the transition economies, auction were used to privatize the state owned enterprise to citizens of the country and citizens may be :

• external capital owners
• Insider management-employee buyouts.

Therefore Option 1 : Privatize state property is the answer.

Q. 7

Privatization means mobility of anything from public sector to private sector. Transition economy deals with those economic activities which are regulated by State. The place of privatization has differed widely among transition economies. The development of private economic activity has generally been most rapid in the small business sector.

Therefore Option 2 : small business sector is the answer.

Q. 8

Privatization means mobility of anything from public sector to private sector. Sources of inefficiency reveals that Government is the problem, that is the state forces the enterprises to do such things that it would prefer not to do such as to employ too many workers. From a traditional equity view point, the Governments involvement in economic concerns distribution of state owned industries.

Therefore Option 1 : distribution of state owned industries is the answer.

Q. 9

Privatization means mobility of anything from public sector to private sector.

During the communist period some properties were seized. Such properties were returned later back to the owners or to their descendants and this pave the way for a sudden development of private form of rental sector. This is known as restitution of property.

Therefore Option 1 : Restitution is the answer.

Q. 10

Privatization means mobility of anything from public sector to private sector. It can be established through five major tools which are :

• Privatization through sale shares in the stock market
• Privatization of sale of asset especially through auction.
• Privatization by means of voucher which is really cheap
• Privatization in socialist countries.
• Buy out by management or employees.

As Direct sales, auction and voucher method comes under the tools of rapid privatization, Option 4 : All the Above is the answer.