According to Institutional Economists, Which Mechanism Improves the Efficiency of Markets

question 40

Multiple Choice

According to institutional economists, which mechanism improves the efficiency of markets?

• A) unregulated trade
• B) unions with bargaining rights
• C) macroeconomic policy
• D) wealth redistribution

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Definitions:

Dividend Preference Theory

A theory that suggests investors prefer dividends over future capital gains because dividends provide certainty.

"A bird in hand"

A principle implying that it is better to have a certain, smaller benefit now than a possibility of a greater benefit later, often used in dividend policy discussions.

Future Earnings

Projected or anticipated profits a company expects to earn in future periods, often used for valuation purposes.

Short-Term Benefit

Refers to immediate rewards or perks provided to employees, including bonuses, sick leave, and temporary incentives.