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Glossary Adjusted factor cost (AFCJ standard. This method adjusts all commodity prices to make them equal to average costs of production. In other words, the AFC standard takes out all taxes and subsidies from the prices of goods and services and replaces all types of income with a uniform for all sectors average return on capital. The adjusted prices also include depreciation of capital in free household services, science, and housing sectors. Comparable prices. These prices are supposed to have been adjusted for inflation by Soviet statisticians. The methodology used by the Soviets for the adjustments, however, is not clear. Most Western observers believe that these prices include a significant amount of inflation and view these prices as utterly unreliable. Current or established prices. These prices are the prevailing nominal ruble prices within the economy, i.e., the existing prices, not adjusted for inflation. Deflation. In the context of this conference, deflation is the process of adjusting economic data for inflation. Input-output table. An input-output (I-O) table is in essence a graphic presentation of the national accounts of an economic system, showing the interrelations among the producing and the using sector. The table has four quadrants only three of which are generally used. the first or the interindustry transactions quadrant shows the flows of intermediate inputs from one branch of the economy to another; the second or final use quadrant shows the distribution of production to final use; and the third or value added quadrant presents the distribution of primary inputs to final users. The I-O table presents an internally consistent picture of transactions flows within the economy. (The above description is adopted from P. Gregory and R. Stuart, Soviet Economic Structure and Performance, 4th edition, Harper & Row, New York, 1990.) Marginal rates of transformation (MRT). MRT is the numerical value of the slope of the production possibilities frontier, i.e., the number of units of one kind of good one can obtain by giving up one unit of another kind of good. Production possibility frontier (PPF). PPF is all "efficient" combinations of goods and services that can be produced given the resources of the society and the existing state of technology. A combination X is 22

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THE SOVIET ECONOMY 23 efficient if given the resource endowment the society cannot produce more of all goods and services than is contained in X. Purchasing power parity (PPP). PPP is the rate of exchange between the currencies of two countries in which the units of national currency expressed in the exchange rate command equivalent or comparable purchasing power, in terms of specified commodities, in either the domestic or world markets (Adopted from H. Sloan and ~ Zurcher, A Dictionary of Economics, Barnes & Noble, New York, 1951.)

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