Which of the Following Would Be Most Likely to Encourage

question 61

Multiple Choice

Which of the following would be most likely to encourage capital formation in a less-developed country?

• A) The expectation of sustained high inflation.
• B) The expectation that property rights will be highly secure in the years ahead.
• C) The imposition of high tariffs and other restraints limiting imports.
• D) Higher personal and corporate tax rates.

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Definitions:

Economic Efficiency

A condition in which a market or an economy utilizes resources in a way that maximizes the production of goods and services.

Supply-Elasticity Differences

Variations in how sensitive the quantity supplied of a good is to changes in its price across different markets or goods.

Productivity Differences

Variations in the efficiency of production processes or workers, impacting the output generated from a set amount of inputs.

Private Ownership

The legal right of individuals or corporations to own property and assets, distinguishing from public or state ownership.