How does the political environment affect economic growth?
A) Political instability can reduce foreign investment, thus reducing growth.
B) Economic growth only depends on markets and production, while politics has no impact.
C) Policies designed to prevent imports from other countries generally increase economic growth.
D) Policies designed to restrict the immigration of foreign workers generally promote growth because wages earned by foreigners are not part of GNP.

Question

Quizplus · Accepted Answer

Political instability, such as frequent changes in government, civil unrest, and corruption, can scare off foreign investors, which can reduce economic growth. On the other hand, stable political environments can help create an environment that encourages investment and economic growth.

How Does the Political Environment Affect Economic Growth