For a Developing Country That Wants to Increase Its Stock

question 16

Multiple Choice

For a developing country that wants to increase its stock of real capital fairly quickly, which of the following is NOT a valid option?

• A)implementing policies designed to increase educational levels
• B)asking foreign firms for direct investments in the country
• C)borrowing funds from the World Bank for real capital investments
• D)asking other countries for foreign aid to buy new machines
• E)increasing private domestic saving

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Definitions:

Supply Equation

A mathematical expression that shows the relationship between the quantity of a good that producers are willing to sell and factors that influence this quantity, such as price.

Price Floor

A government or group-imposed price control that sets the lowest legal price a commodity can be sold at. It is used to ensure producers receive a minimum price often in agriculture.

Shortage/Surplus

Shortage occurs when demand exceeds supply, while surplus occurs when supply exceeds demand.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a given price level in a market.