Final answer:
Property rights are the rights of individuals and firms to own property and use it as they see fit. Adherence to the rule of law and protection of property rights by the government is crucial for economic growth and higher standards of living.
Step-by-step explanation:
Property rights are the rights of individuals and firms to own property and use it as they see fit. Contractual rights are based on property rights and they allow individuals to enter into agreements with others regarding the use of their property providing recourse through the legal system in the event of noncompliance.
Economic growth depends on adherence to the rule of law and protection of property rights by the government. Property rights enable individuals and firms to use their property for trade and economic activity, promoting economic growth and higher standards of living.
For example, if you have $100, it is your property and you have the right to use it, spend it, lend it, or keep it in a jar. Similarly, individuals have the right to enter into contracts with others using their property and the government must provide a legal system to enforce these contracts.