What is economic freedom and why is it important for economic growth?
What will be an ideal response?
Economic freedom is a condition when people are able to make their own choices, their private property is protected, and they are free to trade in markets. Economic freedom is a necessary precondition for economic growth because all three aspects of economic freedom are highly growth enhancing. People are the best judges of their own interests and abilities, so allowing them to make their own decisions creates the best decisions about what activities will be undertaken. Protecting private property is necessary in order to give people the incentives to specialize and trade as well as to save and invest, all actions that will increase economic growth. Letting people trade in free markets again respects people's abilities to make the best decisions for themselves, and also increases people's incentives to specialize and trade.
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Suppose that during a given month 200,000 persons who had been self-employed leave their business and get jobs working for other businesses. This will cause
A) the unemployment rate to rise. B) the unemployment rate to fall. C) payroll employment to rise. D) payroll employment to fall. E) no change in either the unemployment rate or payroll employment.
Public policy towards externalities becomes important when _____
a. transactions costs are zero b. transactions costs are low c. transactions case are high d. there is no relationship between transactions costs and externalities
According to the graph shown, if the economy were to open to free trade, it would become:
This graph demonstrates the domestic demand and supply for a good, as well as a tariff and the world price for that good.
A. a net-importer.
B. a net-exporter.
C. an autarky.
D. less efficient with less overall market surplus.
A simultaneous increase in demand and supply leads to an increase in price
Indicate whether the statement is true or false