CHAPTER 17

Which of the following will increase economic freedom? A Freedom to enter and compete in markets. B High tariff rates. C High taxes. D Rapid and unpredictable inflation.

A Freedom to enter and compete in markets.

Which of the following will increase economic freedom? A Institutions and policies supportive of voluntary exchange. B High tariff rates. C High taxes. D Rapid and unpredictable inflation. E All of the above.

A Institutions and policies supportive of voluntary exchange.

Which of the following will increase economic freedom? A Low rates of inflation and easy access to money that maintains its purchasing power. B High tariff rates. C Government spending that comprises a large share of the economy. D Rapid and unpredictable inflation.

A Low rates of inflation and easy access to money that maintains its purchasing power.

Countries with more economic freedom have levels of economic growth that A are generally higher than those of nations with less economic freedom. B are similar to those of nations with less economic freedom since the level of investment, not economic freedom, determines the growth rate. C cannot continue at high levels because too little government planning is being done. D are generally lower than the growth rates of countries with less economic freedom.

A are generally higher than those of nations with less economic freedom.

High income countries with larger governments as a share of GDP have generally A grown less rapidly than their counterparts with smaller governments. B experienced less deadweight losses resulting from taxes and/or government borrowing. C seen the government decrease in size as real GDP rises. D been able to be more economically efficient.

A grown less rapidly than their counterparts with smaller governments.

Political institutions are more likely to allow and encourage the emergence of good economic institutions and policies when A the top government executives have enough power to impose good economic arrangements on the nation. B constitutional constraints prevent laws and regulations that weaken the rights of property owners, curtail voluntary exchange, and provide for decentralization of government. C the elected executive and legislative branches have fewer constraints on what they can do, leaving them free to innovate and improve economic institutions. D well organized interest groups exert a powerful influence on the political process.

B constitutional constraints prevent laws and regulations that weaken the rights of property owners, curtail voluntary exchange, and provide for decentralization of government.

Democracy tends to best promote freedom when there is A unrestrained executive and legislative majority power. B constitutional protection of private property rights. C a large and centralized government sector. D all of the above.

B constitutional protection of private property rights

Researchers have found that countries that were settled by Europeans who were primarily interested in resource extraction were A more likely to protect private ownership rights and limit the power of the government. B less likely to protect private ownership rights and limit the power of the government. C more likely to protect private ownership, but less likely to limit the power of the government. D less likely to protect private ownership, but more likely to limit the power of the government.

B less likely to protect private ownership rights and limit the power of the government.

Realization of gains from trade, entrepreneurial discovery, and investment are largely dependent on A competitive elections and political democracy. B the presence of institutions and policies consistent with economic freedom. C the use of tariffs and quotas to protect domestic businesses from competition with foreigners. D the use of government planning to direct investments into worthwhile projects.

B the presence of institutions and policies consistent with economic freedom.

Which of the following will increase economic freedom? A An increase in tariff rates imposed on imported goods. B An increase in government spending as a share of the economy. C Elimination of regulations that make it difficult to start a business. D An increase in the rate of inflation and its variability.

C Elimination of regulations that make it difficult to start a business.

The empirical evidence indicates that compared to economies that are less free, countries with institutions and policies more consistent with economic freedom A grow more rapidly, but experience higher poverty rates. B achieve higher income levels per person but experience higher poverty rates. C grow more rapidly and achieve larger poverty rate reductions. D experience less rapid rates of economic growth and higher overall poverty rates.

C grow more rapidly and achieve larger poverty rate reductions.

Which of the following provides the fuel for growth and achievement of high income levels? A Gains from trade B Entrepreneurial discovery C Capital formation D All of the above

D All of the above

Which of the following will be required for a country to move up the income ladder and achieve high-income status? A Rapid growth of the money supply. B Restrictions limiting the import of goods from other nations, particularly low-wage countries. C Tax incentives that encourage consumption rather than investment. D Sustained economic growth.

D Sustained economic growth.

During 1980-2013, the developing countries that moved most rapidly toward economic freedom A achieved higher rates of economic growth, but the reductions in their poverty rates were smaller than those for countries that were less free. B grew less rapidly, but the reductions in the poverty rates were greater than those achieved in countries that were less free. C experienced both slower rates of economic growth and smaller reductions in poverty rates than countries that were less free. D experienced both more rapid rates of economic growth and larger reductions in poverty rates than countries that were less free.

D experienced both more rapid rates of economic growth and larger reductions in poverty rates than countries that were less free.

Stable money and prices are a key source of economic growth because A they allow activist policymakers to fine tune the economy. B uncertainty and instability in prices will attract investors and business decision makers. C price instability increases capital formation. D price stability reduces the risks that accompany investment and other long-term commitments.

D price stability reduces the risks that accompany investment and other long-term commitments.