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Sindrei [870]
2 years ago
9

Which of the following were REASONS why the Soviet Union was in such dire economic straits during the later 1980s?

Social Studies
2 answers:
attashe74 [19]2 years ago
6 0
A series of failed economic programs
tatyana61 [14]2 years ago
5 0

Answer:

  • The protracted Afghanistan War
  • A series of failed economic programs
  • Increasing amounts of defense spending

Explanation:

Economic stagnation and rising military expenditures (especially with defense tactics) began to compromise good social indicators and economic growth, the rates of economic growth, which in the 1950s and 1960s ranged from 5 to 8 percent, fell to less to reach zero growth in the first half of the 1980s in the Soviet Union.

The military costs of the Cold War were already unsustainable for the USSR in the late 1970s. The country had armed forces of nearly 2 million men, with 1 million mobilized in Eastern Europe. When China approaches the US in the 1970s and starts to threaten the USSR, the situation worsens. China stationed nearly 1 million men on the border with the Soviet Union, and to counterbalance it, it had to park another 1 million men on the border with China. The costs of this permanent mobilization began to prove unsustainable in the early 1980s with Soviet involvement in the Afghan conflict.

The costs of the Afghanistan War were sky-high for an economy in crisis like the Soviet one and ended up having the effect imagined by the USA: they extended to the maximum and they depleted deeply the economic and military capacity of the Soviet Union. The cost of the war in Afghanistan was compounded by the increasing costs of aid that the country had to send to very poor socialist and civil war countries, such as Angola, Mozambique, and Ethiopia, whose governments faced the upsurge of internal conflicts against US-backed insurgents .

The situation becomes desperate when the 1986 Chernobyl nuclear accident occurs in Ukraine. In addition to immediate costs, the radiation leak has contaminated grain production in Ukraine, considered the "agricultural barn of the Soviet Union." The USSR now had to import food and did not have the economic resources to do so. In a rigidly planned economy this meant rationing of staple foods like bread. The deep crisis situation paved the way for collapse.

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According to brutus, A confederation of small republics is more likely to preserve and protect personal liberties, because as the people are the sovereign, and their sentiments are communicated by themselves which is why it must be limited so that the people can conveniently assemble and debate.

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Monetary Policy refers to the use of money supply and interest rates by the Central bank of a country to help achieve Economic goals such as inflation, consumption and economic growth. An expansionary monetary policy increases money supply and a contractionary policy decreases it.

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<u>1. Rapid investment during a boom period threatens to overheat the economy. </u>

Fiscal policy solution:  Contractionary Fiscal Policy

The Economy might overheat because of a high amount of investment in production. This means that Aggregate Demand is moving too fast. To rein this in with Fiscal Policy, the Government can increase taxes and reduce spending. This way people have less money to save to be used for investment and companies have less money to do the same.

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Monetary policy solution: Expansionary Monetary Policy

The Central bank should also aim to increase interest rates and money supply at least in the short run. By decreasing the Discount rate as well as the Reserve requirement, and embarking on Open Market Operations where they buy securities from the public, they can increase money supply. This increase in money supply will mean that there is excess money for investment which will lead to increased employment.

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