Question 1

Which of the following statements is true?

Accepted Answer

The economic institutions of a country and its political institutions are deeply interlinked. Political institutions help determine economic institutions, which, in turn, shape incentives and opportunities for economic activity. Extractive political institutions tend to lead to extractive economic institutions, which, in turn, inhibit economic growth, while inclusive political institutions tend to produce inclusive economic institutions that enable economic growth.

Question 2

Barylia is an economy with extractive institutions,such as the absence of private property rights and high tax rates.Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?

Accepted Answer

The answer of Barylia is an economy with extractive institutions,such...

Question 3

Which of the following statements is true?

Accepted Answer

Institutions have a large role in determining the accumulation of factors of production and the adoption of new technology, as they create the incentives for individuals and firms to invest in these areas. While cultural and geographical factors may also play a role in economic prosperity, they are often harder to change than institutional factors. Societal religious beliefs and social norms may also have some impact, but they are not considered the primary proximate causes of prosperity.

Question 4

When institutions do not protect private property rights,do not uphold contracts,interfere with the working of markets,and erect significant barriers to businesses and occupations,they are referred to as ________.

Accepted Answer

Extractive economic institutions refer to institutions that do not protect private property rights, do not uphold contracts, interfere with the working of markets, and erect significant barriers to businesses and occupations. This ultimately leads to the concentration of wealth and power in the hands of a few, stifling economic growth and development. In contrast, inclusive economic institutions protect property rights, uphold contracts, and promote market competition, leading to greater economic prosperity for all. Transitive economic institutions and exclusive economic institutions are not commonly used terms in economics.

Question 5

Extractive institutions control political power to ________.

Accepted Answer

Extractive institutions control political power in order to extract resources and wealth from society for the benefit of the ruling party or elites. This involves transferring resources from society to the ruling party, rather than allowing for competition and growth through the provision of property rights and an equitable legal system.

Question 6

When a society's economic institutions provide secure property rights,set up a judicial system that enforces contracts and upholds the law,allow private parties to sign contracts for economic and financial transactions,and maintain relatively free entry into different businesses and occupations,the institutions in the society are said to be ________.

Accepted Answer

When a society's economic institutions provide secure property rights, set up a judicial system that enforces contracts and upholds the law, allow private parties to sign contracts for economic and financial transactions, and maintain relatively free entry into different businesses and occupations, the institutions in the society are said to be inclusive. Inclusive institutions promote economic growth and development by providing a level playing field for all individuals and businesses to participate in the economy. In contrast, extractive institutions favor a small group of elites, limit economic opportunities, and discourage innovation and entrepreneurship. Exclusive institutions restrict the participation of certain individuals or groups and limit economic opportunities based on factors such as race, gender, ethnicity, or social class. Exogenous refers to factors that originate outside a given system or model, and is not directly related to the question posed.

Question 7

What are private property rights? Does enforcement of property rights promote economic growth and prosperity?

Accepted Answer

The answer of What are private property rights? Does enforcement...

Question 8

Trends in the economic growth of South Korea have been significantly different from those of North Korea.This is primarily because ________.

Accepted Answer

The significant difference in economic growth between South Korea and North Korea is primarily due to the fact that South Korea has inclusive institutions (such as democracy, rule of law, and property rights) that foster growth and development, while North Korea has extractive institutions (such as dictatorship, censorship, and state control of resources) that inhibit growth and development. The quality of agricultural land is not the main factor influencing this difference in economic growth.

Question 9

Which of the following statements is true?

Accepted Answer

It is possible for an economy to change both its political and economic institutions. In fact, many economies have undergone significant institutional changes throughout history, such as China's shift toward a market-based economy in the late 20th century and the transition of many Eastern European countries from centrally planned economies to market economies after the fall of the Soviet Union.

Question 10

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.There are well-defined property rights in Country A,while there are no property rights in Country B.Given this information,which of the following statements is likely to be true?

Accepted Answer

Well-defined property rights provide individuals and businesses with the incentives to invest, innovate, and create wealth. Property rights also enable the efficient allocation of resources through markets, which in turn promotes productivity and economic growth. Therefore, Country A is likely to grow faster than Country B, where property rights are non-existent, and economic activity is likely to be hindered by the absence of incentives and the misallocation of resources.

Question 11

Which of the following statements is true of economic growth?

Accepted Answer

Countries with inclusive institutions have better property rights, more economic freedoms, and more constraints on the government. These qualities encourage innovation, investment, and entrepreneurship, leading to long-term economic growth. In contrast, extractive institutions hinder progress, as political elites typically benefit at the expense of the general population. Therefore, countries with inclusive institutions are likely to experience faster economic growth than those with extractive institutions.

Question 12

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.In Country B,it is possible for entrepreneurs to borrow money from banks and financial markets,while in Country A,no loans are given for entrepreneurship.Given this information,which of the following statements is likely to be true?

Accepted Answer

Country B is likely to grow faster than Country A because the availability of loans for entrepreneurship can lead to increased investment, job creation, and economic growth. In contrast, in Country A without such loans, there may be fewer opportunities for entrepreneurs to start businesses and create jobs, leading to slower economic growth.

Question 13

Which of the following statements is true?

Accepted Answer

In market economies, competition among firms is a significant driving force, as the market forces ensure that the most efficient firms succeed, and those that cannot keep up eventually fail. In communist economies, the government has a central role in controlling the means of production, and there is less competition among firms as the government chooses which firms to support or eliminate.

Question 14

Extractive institutions ________.

Accepted Answer

Extractive institutions privilege a few individuals or groups at the expense of the broader society or population. This is often done through oppression or exclusionary practices. It is not restricted to any particular type of economy.

Question 15

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.The institutions in Country A are inclusive,while the institutions in Country B are extractive.Given this information,which of the following statements is likely to be true?

Accepted Answer

Inclusive institutions typically ensure well-defined and secure property rights, while extractive institutions often involve the concentration of power and resources in the hands of a few, leading to poorly defined and insecure property rights. Therefore, Country A is likely to have well-defined property rights, while Country B is likely to lack them.

Question 16

Consider two economies: Economy A and Economy B.Economy A is a command economy,while Economy B is a market economy.Given this information,which of the following statements is likely to be true?

Accepted Answer

The answer of Consider two economies: Economy A and Economy...

Question 17

The aspects of the society's rules that concern economic transactions are referred to as ________.

Accepted Answer

Economic institutions refer to the aspects of society's rules that concern economic transactions. Economic ideals and economic principles refer more broadly to beliefs and concepts about the economy, while financial regulations refer specifically to laws and rules governing financial activities.

Question 18

Consider two countries: Country A and Country B.In Country A,there are well-defined private property rights,and in Country B,there are no private property rights.
a)If the institutions hypothesis holds,which of the two countries is likely to grow faster?
b)Is the slower growing economy permanently disadvantaged?

Accepted Answer

The answer of Consider two countries: Country A and Country...

Question 19

Explain the differences between inclusive and extractive economic institutions.

Accepted Answer

The answer of Explain the differences between inclusive and extractive...

Question 20

Private property rights mean that ________.

Accepted Answer

Private property rights refer to the legal ownership of assets and businesses by individuals, giving them the right to control, use, and dispose of their property as they see fit, without interference from others or the government. This means that individuals can own businesses and assets, and their ownership is secure.

Quiz 8: Why Isn't the Whole World Developed?

Which of the following statements is true?

Barylia is an economy with extractive institutions,such as the absence of private property rights and high tax rates.Is it guaranteed that Barylia will always experience no growth or negative growth? Why or why not?

Which of the following statements is true?

When institutions do not protect private property rights,do not uphold contracts,interfere with the working of markets,and erect significant barriers to businesses and occupations,they are referred to as ________.

Extractive institutions control political power to ________.

What are private property rights? Does enforcement of property rights promote economic growth and prosperity?

Trends in the economic growth of South Korea have been significantly different from those of North Korea.This is primarily because ________.

Which of the following statements is true?

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.There are well-defined property rights in Country A,while there are no property rights in Country B.Given this information,which of the following statements is likely to be true?

Which of the following statements is true of economic growth?

Which of the following statements is true?

Extractive institutions ________.

Consider two countries: Country A and Country B.Both countries are identical in all aspects except one.The institutions in Country A are inclusive,while the institutions in Country B are extractive.Given this information,which of the following statements is likely to be true?

Consider two economies: Economy A and Economy B.Economy A is a command economy,while Economy B is a market economy.Given this information,which of the following statements is likely to be true?

The aspects of the society's rules that concern economic transactions are referred to as ________.

Explain the differences between inclusive and extractive economic institutions.

Private property rights mean that ________.