If property rights are not clearly defined and enforced, then
A) incentives for specialization based on comparative advantage are weakened.
B) some potential gains from specialization and trade are lost.
C) resources are devoted to protecting possessions rather than to production.
D) All of the above answers are correct.
D
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Production processes in developing countries tend to be
a. labor intensive b. capital intensive c. highly automated d. market oriented e. none of the above
All of the following are examples of human capital except:
A. physical strength. B. an eye for decorating and color. C. a PhD in chemistry. D. an automotive manual.
The World View article on the rise in gold prices indicates that
A. The law of supply is not really relevant to the article. B. The law of supply is true because as the price of gold rises, the quantity supplied of gold actually falls. C. The law of supply is true: as the price of gold rises, miners around the world search for new deposits of gold. D. The quantity supplied falls when the price of gold rises.
The nominal interest rate on taxable bonds is 8%, while on municipal bonds (which aren't taxable) it is 5%. The expected inflation rate is 3% and the tax rate on interest income is 40%. Calculate the expected real after-tax interest rate on both bonds. Which would be the better investment? Now suppose the actual inflation rate turned out to be 6%. Which bond was the better investment? Would your answer change if inflation had turned out to be 0%?
What will be an ideal response?