In the absence of well-defined property rights, we would likely find
A) people with more incentives to take risks.
B) people with less incentives to take risks.
C) higher economic growth rates.
D) increases in investment activity.
B
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The theory that firms will be slow to change their products' prices in response to changes in demand because there are costs to changing prices is called
A) transactions cost theory. B) cost—benefit theory. C) menu cost theory. D) gift exchange theory.
If the interest rate is positive, the future value of an interest bearing investment is always larger than the present value
What will be an ideal response?
As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to
a. overstate the impact of higher prices on consumers. b. consistently underestimate the true inflation rate. c. omit the benefits of product quality improvements. d. have larger fluctuations than other price indexes.
Answer the following statements true (T) or false (F)
1) Increases in household and business spending are a demand factor in economic growth. 2) To fully realize economic growth through the efficiency factor, an economy must increase its stock of capital goods and improve its technology. 3) If an economy is currently producing on its production possibilities curve, a rightward shift of the curve is a necessary but not sufficient condition for economic growth. 4) Economic growth can be shown as a movement from a point on one production possibilities curve to a point on a curve located farther from the origin.