A Developing Economy Is Considering Restricting the Amount of Money

question 97

Multiple Choice

A developing economy is considering restricting the amount of money its citizens can invest abroad. What might the purpose of this restriction be?

• A) to increase the dependency of the economy on developed economics
• B) to increase capital formation by forcing its citizens to invest in their own country
• C) to reduce the nation's trade deficit so that interest rates will be reduced and capital formation will increase
• D) to increase the degree of equality in the income distribution

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Definitions:

Zero

A numerical value representing no quantity or null in mathematical terms; it serves as a placeholder in the decimal system.

NPV

Net Present Value (NPV) is the calculation used to determine the present value of a series of future cash flows minus the initial investment, used in capital budgeting to assess the profitability of an investment.

IRR

The Internal Rate of Return is the discount rate that makes the net present value of all cash flows from a particular project equal to zero.

Mutually Exclusive

situations or events that cannot occur at the same time.