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Central planner decided about what to produce, how to produce may vary according to political agenda, the products are make for the people who is most in need. At the start of World War ?. Romania proclaimed its neutrality but it still was invaded, about 270,000 Jews were massacred in Fascist Romania. People were not satisfied the country so it lead to the economic problem: unlimited wants + limited resources = scarcity. Then king Carol ? dissolved parliament, granted the new prime minister, Lon Antonescu, full power, abdicated his throne, and went into exile.
So the country started to be controlled by the prime minister, and the economy went back to the traditional economy from the command economy. With time passing by, Romania has experienced many armies and in 1995 Romania joined the Warsaw Treaty Organization and the United Nations. This national objective may help it’s economy change in some ways. Romania has been very well in these years. Their economy has a large increase and the citizens lived comfortable than before. During 1967 to 1989, Nicolae Ceausescu turned the country from a moderately prosperous into one at the brink of starvation.
He uses $10 billion to pay his own debt. From this we can see the economic problem about opportunity cost. He forgoes the better life and better future of Romania. Then from 1995 the post-communist governments’ conflicted and halfhearted attempts to change to a free market economy: . From the graph we can see the country changes to the mixed economy from the command economy. But because of the government’s inefficiencies the society didn’t change into what they want and cause many problems, especially social unrest, citizens didn’t agree with the government, the economy went back to the command economy.
In 2004 Romania has a great chance. Romania joined NATO and in 2005 the EU approved the entry of Romania in 2007. The international organization can help the country. The globalization is the most important part. This can bring Romania free trade and specialization and technology. The GDP is $124,7billion in 2007 and $139,8 in 2008 which growth 7,3% in 2008. Globalization can bring foreign investments to Romania because Romania needs foreign investments to satisfy people’s unlimited wants, and this all can help the country growth in it’s economy.
With globalization the country can satisfy unlimited wants and it can also minimize resource wastage which can mean maximizing efficiency. We can show it on the PPC graph . The PPC graph is the production possibility frontier (PPC) it is a graph that all of the combinations of goods and services that can be produced if all of society’s resources are used efficiently. But Romania doesn’t have too much money to afford the change. We can show it on this graph . The economy wants to move from A to B. The economy changes to mixed economy again.
Several years later In 2009 Romania has social unrest. Citizens don’t agree with the government and it makes the government in turmoil. In November 2009 the government forgoes the choice of Lucian Croitoru stayed in the office but choose the BOC quickly introduced stringent budget cuts and vowed to address the country’s financial crisis. This is the opportunity cost. Opportunity cost is the value of the best alternative given up by a decision to do something else. It caused by the choice among alternatives, and the basic reason is scarcity, and we have to choose the best alternative.
Scarcity arises because resources are limited but wants are unlimited. The Romania has many chance to change into the mixed economy not keep present situation but the government didn’t help the country in a good way to change. This graph can show: . When it in the point 1 it is command economy the government control the economy, Romania starts in this point and many times backs here. Point 2 is both command economy and mixed economy but the command economy is more than mixed economy, Romania is mostly in this point.
Then point 3 is mixed economy Romania tried many times to reach this point but all failed. The fourth point is mixed and market economy, mixed is more than market, the fifth point is market economy. This two point Romania never reach it. The government makes many mistakes so the country’s economy could just stay in the command economy and the citizens can’t get their wants because of the government’s wrong lead and the limited resources. At last Romania just keep the command economy.