Question

What can​ low-income countries do in order to increase the amount of loanable funds available to firms for investment projects such as new factories or improved​ technology?

A. Provide savings incentives
B. Print more money
C. Increase the interest rate on borrowing
D. All of the above

Answer 1

A) Provide savings incentives

Step-by-step explanation:

Total national savings equal the total investment component of the gross domestic product of a nation. The only way you can increase investment is by saving more money.

The simplest way (but also ineffective) of increasing savings in an economy is by increasing interest rates. It is ineffective since you increase both interest paid to people that save money and those who borrow money. If you print more money all you are going to do is increase the inflation rate.

A more efficient way of increasing savings would be offering tax incentives for those who save money.