What Is the Problem with Saving in DVCs, Even When

question 159

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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