What Is the Problem with Saving in DVCs, Even When

question 145

Multiple Choice

What is the problem with saving in DVCs, even when saving as a percentage of domestic output is the same as in industrially advanced countries?

• A)The interest rate paid on money kept in a bank in DVCs is not as high as the interest rate on money kept in a bank in an IAC.
• B)Capital flight reduces investment opportunities and the need for saving in DVCs.
• C)There is a continual brain drain that removes skilled labor from the work force and reduces labor productivity and the need for saving.
• D)The domestic output of DVCs is so low that the absolute volume of saving is small.

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Definitions:

Kansas-Nebraska Act

The 1854 U.S. legislation that created the territories of Kansas and Nebraska, allowing settlers in those territories to decide whether to allow slavery, leading to significant conflict and violence.

Missouri Compromise

A 1820 agreement admitting Missouri as a slave state and Maine as a free state, maintaining a balance between slave and free states in the United States.

Popular Sovereignty

The principle that the authority of the government is created and sustained by the consent of its people, through their elected representatives.

Franklin Pierce

The 14th President of the United States (1853-1857), known for his pro-Southern views and policies that exacerbated sectional tensions leading up to the Civil War.