Question

Write the meaning of 'Shock Therapy'.

Hint:

Shock Therapy involves drastic changes and may cause short-term hardship, but its goal is to stabilize the economy for long-term growth.

Answer 1

Shock Therapy is a set of economic policies implemented abruptly to stabilize an economy facing hyperinflation, high unemployment, or social turmoil. Typically, it involves measures such as privatization, deregulation, and cutting public spending to rapidly transition from a centrally planned economy to a market-driven one. This term became popular after its application in Eastern Europe and Russia in the 1990s, especially following the collapse of the Soviet Union.