The Transactions Costs of Writing and Enforcing Contracts Are Higher

question 16

Multiple Choice

The transactions costs of writing and enforcing contracts are higher in:

• A) countries with poorly-enforced property rights.
• B) countries with strongly-enforced property rights.
• C) all counties with good court systems.
• D) countries without political risks of property confiscation.

Identify factors affecting the magnitude of dissonance.

Recognize the role of external and internal justification in cognitive dissonance theory.

Explain the processes and outcomes involved in dissonance reduction strategies, such as spreading of alternatives and trivialization.

Analyze the impact of cultural backgrounds on the experience and handling of cognitive dissonance.

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Definitions:

Annual Payments

Regular payments made once a year, often related to loans, annuities, or other financial instruments.

EAR

Stands for Effective Annual Rate, which is the real return on an investment, accounting for the effect of compounding interest over a period.

Compounded Semi-Annually

Concerns the process where the interest earned on an investment is added to the principal twice a year, allowing the interest to earn interest.

Rate of Return

Indicates the percentage of profit or loss on an investment over a specific time period, expressing the gain or loss in comparison to the investment's cost.