One Argument That Often Is Given in Favor of Foreign

question 80

Multiple Choice

One argument that often is given in favor of foreign aid as an effective tool to help developing countries is that:

• A) there is no evidence that aid money is ever diverted to other purposes.
• B) aid money is likely to be used to provide extra benefits to government leaders.
• C) corruption is a larger problem in high-income countries and so aid money is likely to be spent more efficiently in a developing country than in a high-income country.
• D) problems are worse in developing countries and so aid dollars given to them address more critical issues than the dollars that are spent in a high-income country.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Acid-Test Ratio

A financial metric that measures a company's ability to pay off its current liabilities with its quick assets such as cash, marketable securities, and accounts receivable.

Quick Ratio

A metric to evaluate a company's short-term liquidity position, calculated by dividing liquid assets by current liabilities.