Property rights provide individuals with incentives to invest in capital by giving them the assurance that they will be able to retain the value of their investment. This, in turn, contributes to economic growth. Additionally, property rights encourage individuals to engage in the exchange of resources and goods, which leads to specialization and increased efficiency in the economy. Therefore, property rights have a positive effect on economic growth.

Solved

Property Rights

Question 157

Multiple Choice

Property rights

A) discourage economic growth by discouraging the development of new ideas and ways of doing things.
B) encourage investment but discourage entrepreneurial activity, so the effect on economic growth is uncertain.
C) encourage economic growth by creating incentives to invest in capital.
D) reduce the efficiency of government, which reduces economic growth over time.
E) encourage entrepreneurial activity but discourage investment, so the effect on economic growth is uncertain.

Correct Answer: