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    Question

    Market economies that use indicative planning are

    sometimes referred to as…………………………….?
    A Planned Market Economies Correct Answer Incorrect Answer
    B Un Planned Market Economies Correct Answer Incorrect Answer
    C Directive Planned Economies Correct Answer Incorrect Answer
    D Imperfect Market Economies Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    Market economies that use indicative planning are sometimes referred to as “planned market economies”. Indicative planning is a form of economic planning implemented by a state in an effort to solve the problem of imperfect information in market and mixed economies in order to increase economic performance. However, indicative planning takes only endogenous market uncertainty and plans the economy accordingly and does not look into exogenous uncertainty like technology, foreign trade, etc. When utilizing indicative planning, the state employs "influence, subsidies, grants, and taxes [to affect the economy], but does not compel". Indicative planning is contrasted with directive or mandatory planning, where a state (or other economic unit) sets quotas and mandatory output requirements. Planning by inducement is often referred to as indicative planning.

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