Does the political freedom existing in democracies always aid economic growth?
It is claimed that economic growth stimulates political freedom or democracy, but evidence for that correlation is far from conclusive. Some features of democracy, such as majority voting and special interest groups, may also be growth retarding. For instance, if the majority decides to vote for large land reform measures and wealth transfers, the consequences will be higher taxes and market distortions, which will reduce incentives for work, investment and ultimately economic growth.
You might also like to view...
Quantitative easing by the Fed refers to
A) the creation of bank reserves by engaging in large-scale open market operation at very low interest rates. B) decreasing the money supply during a recession to prevent inflation. C) selling private securities issued by the Fed. D) lowering the federal funds rate while increasing the discount rate. E) lowering the required reserve ratio to zero percent.
Of the alternative measures of the price level, _________ overcomes the bias of the CPI and is a better measure of the cost of living because it _________
A. GDP price index; uses a current basket B. PCE price index; uses a current basket of all consumption goods C. PCE price index excluding food and energy; is less volatile D. GDP price index; includes all goods and services bought by Americans