The Dictator of Turan Has Recently Begun to Arbitrarily Seize

question 14

Multiple Choice

The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will

• A)fall temporarily, but will return to where it was when the new owners learn how to farm.
• B)increase because the total amount of human capital in the country will increase as the new owners learn how to farm.
• C)fall and remain lower for a long time.
• D)not be affected unless widespread civil disorder or civil war results.

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Definitions:

Working Capital

The measure of a company's operational efficiency and short-term financial health, calculated as current assets minus current liabilities.

Financial Statements

Reports that provide information about a company's financial condition including income, expenses, and net worth.

Current Ratio

A financial ratio that measures a company's ability to pay short-term obligations using its short-term assets.

Current Assets

Assets expected to be converted into cash, sold, or consumed within one year or in the normal operating cycle of the business, whichever is longer.