Suppose a Developing Country Is Falling Further Behind the Developed

question 8

Multiple Choice

Suppose a developing country is falling further behind the developed countries that it neighbors. As an economic consultant you are called to look at its policies to recommend changes. If you saw all of the following on your visit, which of them could be an explanation for the slow growth in the economy?

• A)You see that new companies require few licenses to move their exports.
• B)You see that the central bank does not pay attention to what the elected officials want.
• C)You see that the roads, bridges, and ports are in great shape thanks to the work of the World Bank.
• D)You see that literacy rates are much below those of its developed neighbors

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Definitions:

Central Bank

An institution that manages a country's currency, money supply, and interest rates, overseeing the commercial banking system.

Inflation Rate

The rise in the average price levels of goods and services within an economy over a given time frame.

Unemployment

The situation when individuals who are able and willing to work at current wage rates cannot find employment.

Inflation Expectations

The rate at which people expect the general price level of goods and services to rise in the future.