What are some of the key economic factors that characterize countries with poor growth records?
Low-growth countries tend to share certain characteristics, among them poorly defined private property rights and restrictions that prevent market competition from increasing the value of resources. High and variable rates of inflation also harm a country's economy. Restrictions on international trade prevent citizens from benefiting from comparative advantage, and poorly functioning capital markets prevent citizens from being productive in their own country. Finally, high marginal tax rates discourage legitimate work and reduce the incentive to be productive.
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Everything else remaining unchanged, what is likely to happen to the equilibrium real interest rate and quantity of credit if the credit supply curve shifts to the left?
A) Both equilibrium rate of interest and quantity of credit will increase. B) The equilibrium rate of interest will increase and the quantity of credit will decrease. C) Both equilibrium rate of interest and quantity of credit will decrease. D) The equilibrium rate of interest will decrease and the quantity of credit will increase.
The possibility for recipients of funds in foreign countries to engage in riskier behavior after receiving financing is called
A. adverse selection. B. inequitable financing. C. moral hazard. D. asymmetric information.