Which of the following best describes a key difference between the economy of Cuba and the economy of North Korea?

• A. Both countries have fully open market economies with minimal government intervention.
• B. North Korea has a higher level of foreign investment than Cuba.
• C. Cuba has allowed limited private enterprise and market reforms, while North Korea maintains strict state control over all economic activity.
• D. Cuba relies primarily on heavy industry, while North Korea relies on tourism.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the economic systems of both countries. Cuba has implemented limited market reforms and allows some private enterprise, whereas North Korea maintains a strict command economy with almost all economic activity controlled by the state.
2. Step 2: Analyze the role of government intervention. In Cuba, the government still plays a significant role but has introduced reforms to encourage private business and foreign investment. In contrast, North Korea has minimal foreign investment and tightly controls its economy without such reforms.
3. Step 3: Evaluate the level of foreign investment. Cuba has gradually opened up to foreign investment, especially in sectors like tourism and agriculture, while North Korea remains largely closed off to foreign investors.
4. Step 4: Consider the main economic sectors. Cuba's economy is more diversified with some emphasis on tourism and agriculture, while North Korea's economy is heavily state-controlled with a focus on military and heavy industry, not tourism.
5. Step 5: Conclude that the key difference lies in the degree of market reforms and private enterprise allowed, with Cuba adopting limited reforms and North Korea maintaining strict state control.