Chapter 2 – Formal Institutions: Economic, Political and Legal Systems

Black Economic Empowerment policies provide preferential treatment to firms employing black people in South Africa
1. True
2. False
The institution-based view analyzes how formal and informal institutions affect firms and other economic actors
1. True
2. False
Informal institutions include edicts and regulations issues by governmental authorities
1. True
2. False
China’s economic transition has frequently been described as big bang, whereas Russian economic transition has frequently described as gradual
1. True
2. False
Democracy is a political system in which the legitimacy of government is derived from its election by the citizens of the country.
1. True
2. False
Common law has been derived from Roman law, and has been influenced by the legal code introduced in France after the French revolution.
1. True
2. False
Corporate governance refers to the rules by which shareholders and other interested parties control corporate decision makers.
1. True
2. False
Which of the following are pillars of the institutional framework as described by sociologist Richard Scott?
1. cognitive
2. normative
3. regulatory
4. all of the above answers
Which of the following represents a category of institutions introduced by economic historian Douglas North distinguished which two types of institutions?
1. Formal
2. Informal
3. Formal and informal
4. Neither formal nor informal
What is not a characteristic of a market economy?
1. Buyers and sellers meeting in a market
2. Prices react to changes in supply and demand
3. Businesses planning production to supply the market in the future
4. Business producing according to an economy-wide central plan
Which statement about the variety of capitalism view is incorrect?
1. In a liberal market economy, coordination happens primarily by companies reacting to price signals.
2. Economies have different inherent logics of how markets and other mechanisms coordinate economic activity.
3. A liberal market economy is superior to a liberal market economy in generating equitable prosperity.
4. In a coordinated market economy, actors such as businesses, governments and trade unions coordinate their actions through a variety of mechanisms, markets is only one of them.
Which of the following represents a form of property right?
1. Ownership of a house
2. Copyright
3. Shareholdings
4. All of the above answers

Chapter 2 – Formal Institutions: Economic, Political and Legal Systems

Quiz