Question 40
Economic Growth and DevelopmentIn order to build up its capital stock, the typical less developed country should ideally
- A.increase total savings
- B.depend on handouts from foreigners
- C.nationalize all foreign concerns
- D.impose tariffs on imports
- E.none of the above.
Show the answer and explanation
Answer: A (increase total savings)
Explanation
Capital formation is financed by saving, so raising domestic savings is the sound way to build capital.