Not enforcing property rights in an economy will
A)cause the market system to work efficiently.
B)not change the level of investment.
C)lower the level of investment.
D)raise the level of investment.
E)increase the demand for loanable funds but not the supply.

Question

Quizplus · Accepted Answer

Not enforcing property rights creates uncertainty and risk for investors, which leads to a decrease in investment. Without property rights, individuals and firms cannot be sure that they will retain control over their assets and therefore are less likely to invest in them. This leads to a decrease in the level of investment in the economy.

Not Enforcing Property Rights in an Economy Will