Question

Suppose Yamahonda, a Japanese-owned motorcycle manufacturer, builds a production plant in Alabama. This is an example of foreign ___ investment in the United States. Which of the following policies are consistent with the goal of increasing productivity and growth in developing countries? Check all that apply. Imposing restrictions on foreign ownership of domestic capital. Pursuing inward-oriented policies. Increasing taxes on income from savings. Protecting property rights and enforce contracts. Which of the following are possible outcomes of rapid population growth? A reduction in human capital per worker A reduction in capital per worker An increase in technological knowledge All of the above

Answer 1

Disposal of investment by foreign countries in home country is called foreign investment. Thus the firm builds a productionplant in other nation is an example of foreign direct investment Following policies are consistent with the goal of increasing productivity and growthin developing nations (a) FDI is an important component in growth of any nation. Imposing restrictions on it will create hindrance in growth of the developing nation. Thus option A does not apply. (b) Market surplus is maximized when markets are left free play of demand and supply And this is true in the context of international trade as well. Thus option B does not apply. (c) Taxes create hindrance in markets, reducing the market surplus. Thus option C does not apply. (d) For proper functioning of free markets, a proper framework is required and clearly defined private property rights are a part of that framework. Law shouldclearly define property rights andinstitutions work so as to properly enforce property rights. Therefore, option D does apply Rapid population growthimplies the increase in populationat a faster rate. Whern population growth becomes "rapid" there is a great chance that the counter-productive level has been reached. Another result is insufficient land to produce crops. This results in hunger and ultimately starvation. With sustained growth and rapid growththoughthere is a risk of overpopulation. When the level of overpopulation is reached, a number of negative effects can occur and a number of startling correlations are being discovered Among the most definite and devastating effects of overpopulation is lack of land Thus all the options apply and hence the correct option is (D)