Cuban Economic Reforms 2012

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Questions and Answers

What is a primary reason for government control over certain sectors?

To encourage businesses to relocate overseas

To ensure the delivery of satisfactory service (correct)

To maximize the profits for private companies

To increase competition among businesses

Why might businesses be tempted to reduce service quality?

To boost profits (correct)

To comply with government regulations

To increase customer loyalty

To improve operational efficiency

In which situation should the government operate sectors more closely?

When there is a risk of high competition

When sectors are run for immediate profit

When businesses are consistently successful

When the public interest is at stake (correct)

What can happen if the government becomes too reliant on private expertise?

The government will lose operational knowhow Signup and view all the answers

What is a potential negative outcome of allowing businesses to set prices in essential sectors?

Higher prices that the needy cannot afford Signup and view all the answers

Which sector is cited as an example of natural monopoly that should be government-controlled?

Power grid Signup and view all the answers

How does government planning differ from business planning in operational outlook?

Government tends to take a longer term view Signup and view all the answers

What is a significant benefit of government running sectors at risk of relocating overseas?

Job retention for local communities Signup and view all the answers

What significant economic reform was introduced in Cuba regarding home transactions?

Buyers and sellers can set home prices independently. Signup and view all the answers

What change occurred for self-employed workers in Cuba starting January 1, 2012?

They are allowed to become self-employed and set their own prices. Signup and view all the answers

How does the economic activity in a command economy generally compare to a non-command economy?

A command economy usually has less economic activity. Signup and view all the answers

What is one reason for the government to step in when businesses cannot undertake a role?

The high risks involved with certain sectors. Signup and view all the answers

What sectors are generally emphasized in a more liberal economy like that of the U.S.?

Private businesses operating many sectors. Signup and view all the answers

Why might the government be able to operate a sector more cheaply than businesses?

Government operations do not require profit generation. Signup and view all the answers

Which of the following statements about Cuba’s new vehicle sales policy is true?

Cubans are allowed to buy and sell used vehicles freely. Signup and view all the answers

What aspect of the government provisions in a command economy can sometimes be superior compared to a non-command economy?

Access to quality education and healthcare. Signup and view all the answers

In what scenario should the government control a sector directly?

If the sector integrates with other government sectors. Signup and view all the answers

What is a potential disadvantage of businesses operating under government regulations?

Oversight may be inferior compared to direct ownership. Signup and view all the answers

Which of the following best describes the role of the government in a command economy?

It controls and supervises all economic activity. Signup and view all the answers

In the context of various economic systems, what is the boundary typically defined by?

The sectors operated by government versus those by businesses. Signup and view all the answers

What is a reason a government may serve as a catalyst in certain sectors?

To undertake large public and infrastructural works. Signup and view all the answers

Which of the following is NOT a reason for government intervention in business?

Business has sufficient capital and interest. Signup and view all the answers

What can be a significant advantage of government funding in sectors like internet and space exploration?

Government can undertake high-risk research that businesses avoid. Signup and view all the answers

What occurs when businesses operate a sector under contractual terms with the government?

Negotiating term changes may be time-consuming and costly. Signup and view all the answers

What is a potential criticism of nonprofit entities?

They may promote divisive or subversive values. Signup and view all the answers

Why might the government prefer to provide services over nonprofit entities?

The government aims to maintain control over the services provided. Signup and view all the answers

What is a characteristic of companies limited by guarantee in Singapore?

They can operate independently and accept public donations. Signup and view all the answers

What type of entities typically lack the required money, resources, and expertise?

Nonprofit entities. Signup and view all the answers

Which of the following is an example of a company limited by guarantee associated with the government?

SG Enable Ltd. Signup and view all the answers

What is a limitation of nonprofit entities compared to government entities in service provision?

Nonprofits may struggle with funding and expertise. Signup and view all the answers

Which of the following is NOT a typical type of nonprofit entity?

For-profit corporations. Signup and view all the answers

Why may government entities use companies limited by guarantee?

To allow for greater commercial independence. Signup and view all the answers

What is the main objective of business compared to non-profit entities?

To generate profit Signup and view all the answers

Why are poor communities often underserved by businesses?

Businesses seek profit-making areas Signup and view all the answers

What was the public reaction to the tender awarded for the construction of a temple and columbarium in Singapore?

Strong opposition to commercializing religion Signup and view all the answers

Which organization is cited as an example of a non-profit entity that controls critical resources?

ICANN Signup and view all the answers

How do non-profit entities typically handle profits compared to businesses?

They reinvest to sustain their goals Signup and view all the answers

What situation exemplifies the sensitivity around making profits from religious services?

Commercial operation of religious sites Signup and view all the answers

What is a typical characteristic of areas served by non-profit organizations?

Social or community service focus Signup and view all the answers

Why might critical infrastructure be better controlled by non-profit entities rather than businesses?

To ensure public benefit and access Signup and view all the answers

Study Notes

Economic Reforms in Cuba

For the first time since early revolution, Cubans can set home prices and make property transactions without government approval.
Allowances for transactions include sales, trades, and gifting to emigrating relatives.
The government enabled Cubans to buy and sell used vehicles freely after 50 years of restrictions.

Self-Employment in Cuba

As of January 1, 2012, various professions such as carpenters and photographers can become self-employed.
Self-employed individuals can set their own prices and must pay taxes while leasing premises from the state.

Comparison of Economic Models

Cuba operates differently than former socialist states by allowing private businesses, fostering more economic activity.
Command economies tend to have less economic activity, resulting in lower average wealth but potentially better state provisions (e.g., healthcare, education).

Government vs. Business Roles

In economies like the U.S., a more liberal economy emphasizes business operations compared to government ownership.
Business failures can negatively impact government reputation, exemplified by disruptions in train services.

Government Sector Control

The government should operate sectors facing natural monopolies, ensuring quality service instead of profit-driven motives.
Price regulation is necessary in sectors where affordability for the needy is a concern.
Government control is crucial in sectors at risk of outsourcing, ensuring job retention domestically.

Long-term and Societal Interests

Government operates with a long-term view, which contrasts with businesses' focus on short-term gains.
The government addresses societal interests, providing welfare and services that are not profit-oriented.

Government as Catalyst

In scenarios requiring high capital, expertise, or risk management, the government serves as a catalyst, taking on projects that businesses may avoid.
Historical examples include the US government's early roles in internet development and space exploration.

Cost Efficiency

Government-controlled sectors can often operate more economically than businesses, avoiding profit-related costs and overheads.
Greater integration of connected sectors under government management leads to improved efficiency and coordinated operations.

Non-Profit Sector Challenges

Nonprofits may cause harm by promoting divisive values and often lack sufficient resources and expertise for substantial impact.
Government involvement is preferred for maintaining control and achieving specific objectives without external influence.

Provision of Goods and Services

Governments may use statutory boards and companies limited by guarantees to deliver non-profit-oriented services, ensuring independence yet accountable services.
Examples of government-linked companies in Singapore focus on societal welfare and specific community needs.

Relative Roles of Business and Societal Groups

Businesses focus on profit, often neglecting underserved populations, while non-profit entities aim to fill gaps left by businesses.
Profitability sensitivity can arise from certain areas, such as religious services, which may provoke societal backlash against commercialization.
Critical resources, like internet governance, may be better served by non-profit entities to ensure public benefit over profit motives.

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Description

Explore the significant economic changes in Cuba that began in January 2012, allowing buyers and sellers to set home prices without government approval. This quiz covers aspects of property transactions, vehicle sales, and the broader implications of these reforms on Cuban society.