Question

According to the chapter​ "How China Grew​ Rich" in The Undercover Economist​, when Deng Xiaoping and other reformers​ "froze" the size of the state economic plan in​ 1985, the strategy was successful​ because:________.

A. Their action was easy to understand.
B. The market operated at the margin.
C. People believed they would follow through on their strategy.
D. All of the above.

Answer 1

D. All of the above.

• A. Their action was easy to understand.
• B. The market operated at the margin.
• C. People believed they would follow through on their strategy.

Step-by-step explanation:

One of the greatest mistakes of classical economists is that their ideas are based on excellent theoretical principles, but there is a gap between theory and reality, specially in economics. No economic plan or reform can work if the citizens do not belief in it and support it. People's expectations are almost impossible to quantify, but they are probably the single most important economic driver. Most people are willing to endure certain temporary hardships if they know that better times are coming and that is exactly what happened in China.