Which of the following statements is true of economic growth?
A) Compared to countries with extractive institutions, economic growth in countries with inclusive institutions is more likely to stagnate in the long run.
B) Countries with extractive institutions are likely to grow at the same rate as countries with inclusive institutions.
C) Countries with extractive institutions are likely to grow faster than countries with inclusive institutions.
D) Countries with inclusive institutions are likely to grow faster than countries with extractive institutions.

Question

Quizplus · Accepted Answer

Countries with inclusive institutions have better property rights, more economic freedoms, and more constraints on the government. These qualities encourage innovation, investment, and entrepreneurship, leading to long-term economic growth. In contrast, extractive institutions hinder progress, as political elites typically benefit at the expense of the general population. Therefore, countries with inclusive institutions are likely to experience faster economic growth than those with extractive institutions.

Which of the Following Statements Is True of Economic Growth