If a country allows foreign investors to repatriate profits, it will impact its

Question

If a country allows foreign investors to repatriate profits, it will impact its economy by

increasing aggregate demand.

decreasing aggregate demand

increasing aggregate supply

decreasing aggregate supply

2 points

Question 26

If a country that has experienced political instability (coups, revolutions, etc.), begins to experience a stable period of elections and peaceful transitions of government, it will impact its economy by

increasing aggregate demand

decreasing aggregate demand

increasing aggregate supply

Increasing both aggregate demand and aggregate supply.

increasing aggregate demand.

decreasing aggregate demand

increasing aggregate supply

decreasing aggregate supply

Explanation / Answer

Option B

When there are restrictions on repatriation, FDIs are limited and so when a country allows foreign investors to repatriate profits, more FDIs will flow and this will increase the rate of interest in the economy, appreciating the currency and reducing net exports which reduces AD.

Option D

A stable period of elections and peaceful transitions of government will be helpful to both firms and households so investment, consumption and production all will increase.  

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