What is economic freedom and why is it important for economic growth?
What will be an ideal response?
Economic freedom is a condition when people are able to make their own choices, their private property is protected, and they are free to trade in markets. Economic freedom is a necessary precondition for economic growth because all three aspects of economic freedom are highly growth enhancing. People are the best judges of their own interests and abilities, so allowing them to make their own decisions creates the best decisions about what activities will be undertaken. Protecting private property is necessary in order to give people the incentives to specialize and trade as well as to save and invest, all actions that will increase economic growth. Letting people trade in free markets again respects people's abilities to make the best decisions for themselves, and also increases people's incentives to specialize and trade.
You might also like to view...
Which of the following statements is true?
A) Growth in technology is linear in nature. B) Growth in land productivity is exponential in nature. C) Growth in technology is exponential in nature. D) Growth in labor productivity is exponential in nature.
When production in an economy grows more quickly than the population in that economy, which of the following must be occurring?
A) Incomes are growing at a slower rate than the population. B) Real GDP per capita is rising. C) Living standards are falling. D) Real GDP is falling.