Asked by Poppin galaxy on Jul 02, 2024
Verified
A country with a relatively low level of real GDP per person is considering adopting two policies to promote economic growth. The first is to decrease barriers to trade. The second is to restrict foreign portfolio investment. Which of these policies do most economists say promote growth?
A) Both the first and the second
B) The first but not the second
C) The second but not the first
D) Neither the first nor the second
Foreign Portfolio Investment
Investment in financial assets from another country, such as stocks or bonds, without seeking control over the companies issuing them.
Barriers To Trade
Restrictions that hinder international trade, including tariffs, quotas, and non-tariff barriers.
- Examine the impact of international commerce and investment on economic progress.
- Evaluate the repercussions of public policies on economic advancement, with an emphasis on trade obstructions and capital transfers.
Verified Answer
NS
Niththiya Sathasivam7 days ago
Final Answer :
B
Explanation :
Decreasing barriers to trade is widely supported by economists as a means to promote economic growth because it allows countries to specialize in the production of goods and services in which they have a comparative advantage, leading to increased efficiency and higher incomes. Restricting foreign portfolio investment, on the other hand, is generally not seen as a growth-promoting policy because it limits the inflow of capital and the opportunities for risk diversification for investors.
Learning Objectives
- Examine the impact of international commerce and investment on economic progress.
- Evaluate the repercussions of public policies on economic advancement, with an emphasis on trade obstructions and capital transfers.