If a country wants to enact policies for growth in the real size of the financial system,financial deepening,it will require:
A) a negative real interest rate.
B) a negative GDP.
C) a positive real interest rate.
D) a decrease in inflation.

Question

Quizplus · Accepted Answer

Financial deepening is the process of increasing the size and scope of a country's financial system. This requires a positive real interest rate, which attracts more investment and encourages savings. A negative real interest rate would discourage saving and incentivize borrowing, leading to inflationary pressures and potentially destabilizing the financial system. A negative GDP would indicate an economic contraction, which is generally not conducive to financial deepening. A decrease in inflation can be a positive step, but it is not sufficient on its own to foster financial deepening.

If a Country Wants to Enact Policies for Growth in the Real