Which of the following is an example of the way the financial markets in the United States can encourage technological progress more efficiently than other countries?
A)Even when entrepreneurs cannot secure sufficient funding for projects from banks, venture capital firms may be willing to lend money.
B)The level of legal protection for investors in the United States is relatively low.
C)Because the financial market in the United States is so large, the quantity of trading in corporate stocks and bonds makes those investments less liquid.
D)Banks in the United States are more willing to take on risk because the government guarantees each bank cannot lose more than $100,000 on any given loan that defaults.
E)The low American savings rates increases the number of people willing to lend to new businesses.

Question

Quizplus · Accepted Answer

Venture capital firms provide funding to startups and other small businesses that are too risky for traditional banks. This encourages technological progress as entrepreneurs with innovative ideas have access to capital to fund their projects. Other countries with less developed financial markets may not have as many venture capital firms, making it more difficult for startups to get funding.

Which of the Following Is an Example of the Way