Rather than pay Renato a high money wage, his employer gives Renato land to till for his own use. However, without a good wage, Renato does not have money to spend on manufactured goods, which then reduces the success of local small industry. This arrangement would encourage which of the following economic situations in Renato's homeland?
A) underdevelopment
B) development
C) capitalism
D) dependency

Question

Quizplus · Accepted Answer

The arrangement between Renato and his employer is not sustainable in the long run as it does not provide Renato with the means to purchase manufactured goods, which could help fuel local small industry. Without a good wage, Renato and others in a similar situation will not have the purchasing power to create or sustain the demand for these goods. This stagnation in the manufacturing industry will prevent economic development in Renato's homeland and promote economic underdevelopment.

Rather Than Pay Renato a High Money Wage, His Employer