Question

The prime minister of the nation of Urbania has called for Urbania's legislature to enact new legislation designed to shift his country away from socialism toward a more capitalistic system. The Prime Minister acknowledges that such a radical change will entail some hardships, and that some citizens will be unhappy with the changes. The most likely source of dissatisfaction with a move toward capitalism is:

A. Decrease in wealth.
B. People will have less economic freedom.
C. Tax rates will have to increase.
D. A trend toward unequal distribution of wealth.

Answer 1

The correct answer is option D.

Explanation:

Socialism and capitalism are two very different economic and political structures. Under socialism, the resources are equally distributed in society. The means of production, distribution, and exchange are owned by society as a whole.

While, on the other hand, under capitalism, the trade and industry lie in the hands of a few individuals.

In case of transition from socialism to capitalism, inequality in income distribution will arise as resources will no longer be equally distributed.