Question

How can a developing country generate internal funds?

A) By setting low interest rates to encourage borrowing

B) By outsourcing smaller operations

C) By producing more than it consumes

D) By selling externally to foreign countries

Answer 1

The correct answer would be option C, By producing more than it consumes.

Step-by-step explanation:

A developing country can generate internal funds by producing more than it consumes.

Internal funds are the funds that are generated internally, either at the individual level or at the country level. When a country generates funds on its own, the funds are called as the internal funds.

So internal funds can be generated by producing more than the consumption requirements. In this way the economic activities will increase, the money supply would be better and the country would be able to generate funds it need.