Most of the DVCs find it difficult to accumulate capital goods because
A)the terms of trade prohibit the inflow of private capital from the advanced nations.
B)it is very difficult to restrict consumption and thus to free resources for capital goods production.
C)domestic monetary policies designed to achieve price stability result in low interest rates, thereby discouraging investment.
D)investment is interest inelastic in DVCs.

Question

Quizplus · Accepted Answer

The difficulty in accumulating capital goods in Developing and Vulnerable Countries (DVCs) is primarily due to the challenge of restricting consumption to free up resources for the production of capital goods. This involves a trade-off between current consumption and future investment, which is often hard to manage in economies with pressing immediate needs and limited resources.

Most of the DVCs Find It Difficult to Accumulate Capital