Many economists think that effective institutions are essential for economic growth. In this context, what are institutions?
A. government agencies like the Food and Drug Administration (FDA) or the Environmental Protection Agency (EPA)
B. mechanisms that allow for the use of fiscal and monetary policy
C. the laws, social norms, and conventions of a culture
D. prisons, jails, and psychiatric hospitals that are used to keep certain people isolated from the rest of the population
E. long-standing companies that consumers can depend on for reliable service and products
Ans: C. the laws, social norms, and conventions of a culture
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The most important factor in determining a nation's standard of living in the long run is the productivity of its resources
a. True b. False Indicate whether the statement is true or false
If the production of oranges generates an external benefit, then we would expect the market equilibrium quantity of oranges to be:
A. less than the socially optimal quantity. B. greater than the socially optimal quantity. C. equal to the socially optimal quantity. D. equal to the socially optimal quantity plus the external benefit.
If the price of a company's stock truly reflects the value of a share in the company, then
A. abrupt stock price changes reflect abrupt changes in the public's perception of fundamentals and risk. B. stock prices can only change abruptly when accounting scandals are uncovered, as in 2002. C. it is impossible for the stock price to change by 20% in a single day, as in 1987. D. it is impossible for the stock price to increase by 84% within a single year, as in 1999.
The ability of a country to produce a good or service at a lower cost than its trading partners is
A. its absolute advantage. B. its comparative advantage. C. both its absolute and comparative advantage. D. neither its absolute nor its comparative advantage.