9. The dual nature of financial markets in developing countries-traditional and

Question

9. The dual nature of financial markets in developing countries-traditional and modern- implies that central banks in developing countries A. play essentially the same role as they do in developed economies. B. find it more difficult to conduct monetary policy than central banks in developed economies C. find it easier to conduct monetary policy than central banks in developed economies. D. have effectively no role to play in the conduct of monetary policy 10. In developing countries, government expenditure levels are most closely related to A. what is necessary to achieve long-term macroeconomic objectives. B. what activist fiscal policy is necessary to achieve potential output. C. considerations about what will keep the existing government in power D. what will bring about regime change

Explanation / Answer

9) Correct Option is B, because the traditional sectors are more dependent on cash and commodities whereas modern sector is more dependent on credit and loans.

10) Correct Option is C, considerations about what will keep the existing governmnet in power, hence political motives are largely dominated, thus hindering long term economic growth.

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