Long-term growth in production in an economy can be partially explained by:
A)improvements in the rules of the game that facilitate production and exchange.
B)the peaks and troughs of the business cycle or economic fluctuations.
C)trade surpluses that lead to accumulations of precious metals.
D)federal government budget deficits.
E)a gradual but consistent increase in the price level.

Question

Quizplus · Accepted Answer

Improvements in the rules of the game that facilitate production and exchange, such as better property rights protection, contract enforcement, and the reduction of transaction costs, can lead to increases in productivity and innovation, which in turn drive long-term economic growth. The other options (B, C, D, and E) are not associated with sustained long-term growth.

Long-Term Growth in Production in an Economy Can Be Partially