Government corruption

Question

Quizplus · Accepted Answer

When governments are corrupt, they may interfere with the functioning of markets by controlling access to resources, manipulating regulations, or obstructing competition. These actions can impede the coordinating power of markets, limiting their ability to allocate resources efficiently and effectively. Additionally, corruption can discourage investment by increasing uncertainty and creating an unstable business environment. Investors may be less likely to invest in a country where corruption is prevalent, as they may perceive it as a higher-risk environment. Thus, A is the correct answer because corruption impedes the coordinating power of markets and discourages investment.

Government Corruption