Countries without enforced property rights will have an increase in domestic investments and foreign investments.

Question

BlackTom AI · Accepted Answer

Consider the claim about property rights and investment. The core idea is that secure property rights reduce risk and provide clear rules for ownership and returns, which in turn encourages investment.
Option 1: True. This option asserts that countries without enforced property rights will see an increase in both domestic and foreign investments. In reality, lack of enforcement raises uncertainty, risk of expropriation, and potential losses, which typically deters investment rather than attracts it. Investors demand clarity and protection for their returns, so this statement runs counter to foundational economic reasoning on investment under risk.
Option 2: False. This option aligns with standard economic understanding: when property rights are not enforced, the perceived risk of investment rises, monitoring and contract enforcement become difficult, and potential gains are uncertain. Domestic investors may move funds to safer, better-protected environments, while foreign investors may redirect capital to jurisdictions with stronger protection. Consequently, both domestic and foreign investments are likely to decline rather than increase. The argument also ignores how informal or unstable arrangements can hinder long-term capital-intensive projects and reduce overall economic growth.
In sum, the assertion that investment would increase without enforceable property rights contradicts the incentives created by secure ownership. The lack of enforcement generally discourages investment rather than promoting it, due to higher risk and weaker expected returns.

MCD2090 Macroeconomics - Trimester 2 - 2025

Countries without enforced property rights will have an increase in domestic investments and foreign investments.

查看解析

登录即可查看完整答案

类似问题

Why might some governments provide limited or no property rights to their citizens?

Why might some governments provide limited or no property rights to their citizens?

Match each of the left-hand examples to a dimension of property rights.

Countries without enforced property rights will have an increase in domestic investments and foreign investments.

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单