One Policy Approach That Is Especially Helpful for Governments of High-Income

question 72

Multiple Choice

One policy approach that is especially helpful for governments of high-income countries to use to foster economic growth is to:

• A) raise the exchange rate to increase the incentive for trade.
• B) grant patents and copyrights to allow inventors to gain a return.
• C) improve access to primary education to ensure that the workforce has basic skills.
• D) provide property rights to the poor.

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Definitions:

Unique Risk

Also known as unsystematic or idiosyncratic risk, it refers to the risk associated with a particular company or industry that can be mitigated through diversification.

Securities

Financial vehicles denoting an ownership interest in corporations available on public exchanges, debt obligations held against governmental entities or businesses through bonds, or potential ownership through options trading.

Diversify

Diversify refers to the strategy of spreading investments across various financial instruments, industries, and other categories to reduce exposure to risk.

Efficient Frontier

In portfolio theory, it represents the set of optimal portfolios that offer the highest expected return for a given level of risk or the lowest risk for a given level of expected return.