A disadvantage of foreign aid is that:
A)it leads to a decline in the standard of living in donor countries.
B)it leads to the disinvestment of public sector industries in the recipient countries.
C)the agricultural sectors of recipient countries experience surplus output.
D)government officials are insulated from their own incompetence.
E)it leads to hyperinflation in the recipient countries.

Question

Quizplus · Accepted Answer

One disadvantage of foreign aid is that it can insulate government officials in recipient countries from the consequences of their own incompetence. This can lead to corruption, mismanagement and a lack of accountability, which ultimately undermines the effectiveness of aid and hinders long-term development. The other options are not accurate as foreign aid is not known to lead to a decline in the standard of living in donor countries or hyperinflation in recipient countries, and it does not necessarily lead to surplus output in the agricultural sectors of recipient countries. Additionally, foreign aid does not lead to the disinvestment of public sector industries in recipient countries, as aid is often targeted at supporting and developing these sectors.

A Disadvantage of Foreign Aid Is That