19 of 23
© 2012 Pearson Education, Inc. Publishing as Prentice Hall
To achieve a properly functioning market system, prices must be stabilized. To do so, the government must find a way to move toward a balanced budget and to bring the supply of money under control.
An unregulated price mechanism ensures an efficient allocation of resources across industries.
Ultimately, as the theory of comparative advantage suggests, liberalized trade will push each country to produce the products it produces best.
The Transition to a Market Economy
Six Basic Requirements for Successful Transition
Deregulation of Prices and Liberalization of Trade