Question

132) If the institutions in an economy decide to limit the legal back up that protected the interest of entrepreneurs, the returns-to-entrepreneurship curve in the economy will:

132) A) shift leftward. B) become horizontal. C) shift rightward. D) become vertical. 19

133) If the opportunity cost of entrepreneurship increases:

133) A) the price level in the economy falls. B) the aggregate demand in the economy increases. C) the aggregate output of the economy will decrease. D) the number of entrepreneurs in the economy will increase.

134) The process in which new technologies replace old ones, new businesses replace existing businesses, and new skills make old ones irrelevant is referred to as:

134) A) creative destruction. B) business development. C) globalization. D) liberalization. 135) Creative destruction:

135) A) leads to the benefit of all economic agents. B) is more likely in an economy with inclusive institutions. C) is more likely in an economy with extractive institutions. D) leads to losses of all economic agents.

136) The process in which economic growth destabilizes existing regimes and reduces the political power of rulers and monarchs is referred to as:

136) A) division of powers. B) political creative destruction. C) institutional destruction. D) polarization.

137) Many communist dictators ban the adoption of new technologies to:

137) A) reduce inequality in income. B) discourage creative destruction. C) encourage creative destruction. D) enhance economic growth.

Answer 1

132) Solution: shift rightward

Explanation: Strong property rights and legal enforcement will shift return-to-entrepreneurship to right

133) Solution: the aggregate output of the economy will decrease

Explanation: When opportunity cost of entrepreneurship increases he will prefer not to entrepreneur thus there will be a fall in the aggregate output of the economy

134) Solution: creative destruction

Explanation: Creative destruction refers to the process wherein the new innovative technololy replaces old technologies and makes them irrelevant

135) Creative destruction

Solution: is more likely in an economy with inclusive institutions

Explanation: Creative destruction refers to the process wherein the new innovative technololy replaces old technologies and makes them irrelevant

136) Solution: Political Creative Destruction

Explanation: Political Creative Destruction refers to the process wherein the growth in economy destabilizes existing regimes and decreases the political power.