The Economic Freedom Index indicates that economic freedom is positively correlated with all of the following EXCEPT _
A) life expectancy
B) literacy
C) environmental sustainability
D) diversity
The correct answer and explanation is:
Correct Answer: D) diversity
The Economic Freedom Index measures the degree to which the policies and institutions of countries support economic freedom. This includes factors like rule of law, government size, regulatory efficiency, and open markets. Countries that score high on the index tend to have stronger protections for property rights, lower levels of corruption, and more competitive markets.
Economic freedom has been shown to correlate positively with a range of human development indicators. For instance, higher levels of economic freedom often align with higher life expectancy. This is because freer economies generally provide better healthcare services, cleaner living environments, and access to essential goods. Likewise, literacy rates tend to be higher in economically free countries due to increased government and private investments in education, as well as the presence of efficient school systems supported by wealthier economies.
Environmental sustainability also has a positive link to economic freedom in many cases. Economically free countries often have the resources, technologies, and institutions necessary to implement effective environmental policies. Moreover, wealthier nations are usually better equipped to address pollution and invest in clean energy solutions.
However, diversity is not directly measured or necessarily positively correlated with economic freedom. Diversity refers to the presence of different ethnicities, cultures, religions, or ideas within a population. A country can have a high level of diversity and still rank low in economic freedom, or vice versa. For example, some homogenous countries such as South Korea or Japan rank high in economic freedom, while others with high diversity might struggle with economic instability due to social tensions or institutional weaknesses. Therefore, diversity does not show a consistent or strong correlation with economic freedom, making D the correct answer.