A factor that limits the amount of saving in developing countries is the fact that
A) the banking system does not encourage saving.
B) there is too much foreign aid, so savings is not needed.
C) the level of aggregate domestic output is low.
D) the government controls ﬁnancial institutions and makes it diﬃcult for people to save.

Question

Quizplus · Accepted Answer

The level of aggregate domestic output being low means that people in developing countries have lower incomes and are likely living close to or below the poverty line. This makes it difficult for them to save as they may need to use most or all of their income for basic necessities. Additionally, without access to financial resources, such as banks, it can be difficult to save money. However, A and D may also be contributing factors in some cases.

A Factor That Limits the Amount of Saving in Developing