Which of the following institutions do economists generally consider necessary for sustained economic growth?

• A. Well-defined property rights
• B. Strict price controls on all goods
• C. High levels of government corruption
• D. Absence of financial markets

Answer: (A)

Verified step by step guidance

1. Understand the concept of sustained economic growth, which refers to a continuous increase in a country's output or income over time, typically measured by GDP growth.
2. Recognize that economists emphasize the role of institutions in supporting economic growth, particularly those that create incentives for investment, innovation, and efficient resource allocation.
3. Identify that well-defined property rights are crucial because they ensure individuals and firms can securely own and control assets, encouraging investment and economic activity.
4. Evaluate the other options: strict price controls often distort markets and reduce incentives; high levels of government corruption undermine trust and efficiency; absence of financial markets limits the ability to allocate capital effectively.
5. Conclude that among the options, well-defined property rights are generally considered necessary by economists for sustained economic growth.