Question

How does capital mobility help rich nations? A. Increased taxes discourage economic competition. B. Increased regulations maintain economic incentives. C. Increased controls results in fewer economic opportunities. D. Increased trade results in economic growth.

Answer 1

Answer:

D. Increased trade results in economic growth.

Explanation:

• The capital mobility gives the economy the opportunities to increase global savings with a lower interest rate. The result of capital inflows increases investments.

• This impacts the FDI increases the rate of return and lead to portfolio flows. By allowing the capital to move, freely will lead to an increase in trade and economic development along with growth.