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:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Eurobond

An international bond that is denominated in a currency not native to the country where it is issued, offering a way for entities to raise capital in foreign markets.

Yankee Bond

A bond issued by a foreign entity in the United States, denominated in U.S. dollars, allowing issuers to access capital from U.S. investors.

Samurai Bond

A Japanese yen-denominated bond issued in Japan by a non-Japanese entity, aiming to attract investors based in Japan.