Why does the government's role of enforcing contracts facilitate exchange?
A) Enforcing contracts allows people to trade with confidence that the contracts they enter will be met.
B) Enforcing contracts guarantees consumers that the government will bail them out in case the seller does not fulfill his end of the contract.
C) Enforcing contracts guarantees sellers that the government will bail them out in case the buyer does not fulfill his end of the contract.
D) Enforcing contracts effectively makes the government the seller's partner in the business.

Question

Quizplus · Accepted Answer

Enforcing contracts is essential to facilitate exchange because it gives people confidence that the agreement they enter into will be met. This means that both parties can trust that they will receive what was promised and can engage in trade without fear of being deceived or cheated. When contracts are enforced, buyers and sellers can transact with greater certainty, which makes them more willing to engage in trade and more likely to make mutually beneficial agreements.

Why Does the Government's Role of Enforcing Contracts Facilitate Exchange