For a Developing Country, a _____ Can Foster Economic Instability

question 143

Multiple Choice

For a developing country, a _____ can foster economic instability because it can result in a lending boom and ______ by banks, which promotes a financial crisis.

• A) capital inflow, excessive risk taking
• B) capital inflow, inadequate risk taking
• C) capital outflow, excessive risk taking
• D) capital outflow, inadequate risk taking

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Definitions:

Income Tax

Income tax is a tax levied by governments on individuals or entities based on their income or profits, with rates varying according to income levels.

Consumption

Households utilizing products and services for their needs.

Horizontal Equity

The principle that individuals with similar income and ability should be treated equally by the taxation system, ensuring fairness.

Economic Income

The total value of all earnings received over a period of time, including wages, rental income, interest, and profits.