3. Is institutional change possible? Some countries have histories of powerful,

Question

3. Is institutional change possible?

Some countries have histories of powerful, broad-based governments, in part because colonizers had (long/short) term interests in those countries.

Other things being equal, a country with a government with unchecked powers will most likely be (more/less) productive than a country whose government with limited powers.

True or False: Less-developed countries have a greater incentive to adopt sound institutions and policies as transportation and communication costs decrease.

False

True

The Economic Freedom of the World (EFW) rating of the United States (rose/fell)   between 2000 and 2009. Which of the following are contributing factors of this change? Check all that apply.

-The administrative costs imposed on business increased.

-Nontariff barriers rose during this period.

-The amount of transfer payments increased during this period.

True or False: Democracy is a necessary criterion for economic freedom.

True

False

Explanation / Answer

Some countries have histories of powerful, broad-based governments, in part because colonizers had (long term) interests in those countries.

Other things being equal, a country with a government with unchecked powers will most likely be (less) productive than a country whose government with limited powers.

True or False: Less-developed countries have a greater incentive to adopt sound institutions and policies as transportation and communication costs decrease.

True (as they can copy development models of developed countries)

The Economic Freedom of the World (EFW) rating of the United States (fell from 8.5 to 8) between 2000 and 2009. Which of the following are contributing factors of this change? Check all that apply.

-The administrative costs imposed on business increased.

-Nontariff barriers rose during this period.

True or False: Democracy is a necessary criterion for economic freedom.

False (This is not always the rule that democracy is necessary for economic freedom)

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