Most of the DVCs fiNd It Difficult to Accumulate Capital

question 214

Multiple Choice

Most of the DVCs find it difficult to accumulate capital goods because

• A) the terms of trade prohibit the inflow of private capital from the advanced nations.
• B) it is very difficult to restrict consumption and thus to free resources for capital goods production.
• C) domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment.
• D) investment is interest inelastic in DVCs.

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal portion of the initial cost of an asset to each accounting period over the asset's useful life.

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life, considered in depreciation calculations.

Depreciation Expense

Distributing the cost of a material asset methodically across its productive life.

Units-Of-Activity

A depreciation method that allocates the cost of an asset over its useful life based on the number of units it produces or hours it is used.