Increases in the Level of Political Stability in a Country

question 250

Multiple Choice

Increases in the level of political stability in a country tend to:

• A) increase per capita GDP.
• B) decrease per capita GDP.
• C) have no impact on per capita GDP.
• D) increase per capita GDP at lower levels of stability,but decrease per capita GDP at higher levels of stability.

---

Definitions:

Fixed Exchange Rate

A currency system where the value of a currency is pegged to another currency, a basket of currencies, or a physical commodity like gold.

Exchange Rate

The price of one currency in terms of another, determining how much foreign currency can be exchanged for a unit of domestic currency.

Financial Transactions

Activities involving the exchange of money between parties, including buying, selling, lending, and borrowing.

Purchasing Power Parity

A theory that states that in the absence of transportation and other transaction costs, identical goods should have the same price in different countries when prices are converted into a common currency.