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Chapter 18: Q. aFCT (page 397)

Some international policymakers argue that the world's poor require stronger "nudges, "such as policies that prevent them grow making "bad" choices. How might stronger nudges limit economic freedom and potentially slow economic growth? (What Does reducing the range of people's choices expand or limit their economic freedom??

Short Answer

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Governments replace personal decision, free markets, and market coherence with taxes, government expenses, and restrictions.

Step by step solution

01

Introduction

Governments can stimulate economic mobility by creating a comprehensive architecture and legal mechanism that secures homeowners' property rights and fairly enforces contracts.

02

Explanation

Economic freedom also requires governments to refrain from taking people’s property and from interfering with personal choice, voluntary exchange, and also the liberty to enter and compete aborning and products markets. If authorities substitute free decision, free markets, and competitive coordination with taxes, govt spending, and regulation.

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Most popular questions from this chapter

What does this tell us about a comparison of the average rate of growth of real GDP since 2000 in emerging and developing nations compared with advanced nations?

Suppose that a foreign resident has bought 20 percent of the shares of a company based in a developing nation but is experiencing difficulty determining whether the firm has responded to this purchase by engaging in risker behaviour. What type of investment has this foreign resident undertaken, and what type of asymmetric information problem is she or he experiencing?

Understand why the existence of dead capital retards economic growth?

For each of the following situations, explain which of the policy issues discussed in this chapter relates to the stance the institution has taken.

a. The IMF extends a long-term loan to a nation's government to help it maintain publicly supported production of goods and services that the government otherwise would have turned over to private companies.

b. The World Bank makes a loan to companies in an impoverished nation in which government officials typically demand bribes equal to 50percent of companies' profits before allowing them to engage in any new investment projects.

c. The IMF offers to make a loan to banks in a country in which the government's rulers commonly require banks to extend credit to finance high-risk investment projects headed by the rulers' friends and relatives.

Take a look at Table 18-1. Based on the basic arithmetic of economic growth, what were the average annual rates of real GDP growth since 1990 for those nations experiencing negative rates of annual growth of per capita real GDP?
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