Suppose a developing country is falling further behind the developed countries that it neighbors. As an economic consultant, you are called to look at its policies to recommend changes. If you saw all of the following on your visit, which of them could be an explanation for the slow growth in the economy?
A. You see that the roads, bridges, and ports are in terrible shape.
B. You see that new companies require few licenses to move their exports.
C. You see that the central bank does not pay attention to what the elected officials want.
D. You see that literacy rates rival those of its developed neighbors.
Answer: A
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Which activity of the Fed would tend to increase the nation's money supply?
A) Sales of government bonds B) Lowering the discount rate C) Raising the required reserve ratio D) None of the above.
Choose the best statement
A) GDP equals aggregate expenditure and equals aggregate income. B) An increase in government purchases increases aggregate expenditure but does not change GDP. C) An increase in compensation of employees increases aggregate income but does not change GDP. D) GDP always equals aggregate expenditure and sometimes equals aggregate income.