What Is the Problem with Saving in DVCs, Even When

question 145

Multiple Choice

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

• A)The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
• B)Capital flight reduces investment opportunities and the need for saving in DVCs.
• C)There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
• D)The domestic output of DVCs is so low that the absolute volume of saving is small.

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Definitions:

Accumulated Impairment

The total sum of impairment losses recognized on an asset, reducing its carrying amount on the balance sheet.

Impairment Losses

Impairment losses are accounted for when the carrying value of an asset exceeds its recoverable amount, indicating that the asset is not expected to generate sufficient future economic benefits.

Reversals

Accounting actions undoing previous recognitions, such as reversing an expense or revenue recorded in earlier accounting periods.

Other Comprehensive Income

Income that is not included in net income and includes items that are not realized or not a result of daily operations, such as foreign currency translation adjustments.