An economy is not able to develop because of a lack of capital. Which of the following strategies would you suggest this economy pursue?
A. nationalize private enterprises because the government sector is not motivated by profit maximization
B. lower interest rates
C. impose quotas on how much capital can be imported from other countries to reduce dependency on foreign capital
D. increase the political stability of the economy
Answer: D
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The long run aggregate supply curve is vertical because
A) a change in the level of prices will have no effect on real output in the long-run. B) the production possibilities curve is vertical. C) the aggregate demand curve is downward sloping. D) technology increases at a constant rate.
The demand for labor increases (that is, the demand for labor curve shifts rightward) if the
A) wage rate increases. B) wage rate decreases. C) price of the firm's output rises. D) price of the firm's output falls.