Which of the following statements is true?
A) Output is likely to be lower in a market economy than in a command economy.
B) Output is likely to be the same in a command economy and in a market economy.
C) Output is likely to be lower in an economy with extractive institutions than in an economy with inclusive institutions.
D) Output is likely to be the same in an economy with extractive institutions and in an economy with inclusive institutions.

Question

Quizplus · Accepted Answer

Extractive institutions, such as corruption and lack of property rights, lead to lower output because they create opportunities for rent-seeking activities and discourage investment. On the other hand, inclusive institutions that ensure the rule of law and secure property rights create a favorable environment for higher output. Therefore, choice C is the correct statement.

Which of the Following Statements Is True