In the early 2000s, analysts feared that low academic achievement in math in the
ID: 1192095 • Letter: I
Question
In the early 2000s, analysts feared that low academic achievement in math in the United States may reduce U.S. economic growth by as much as half a percentage point a year. "That drag will become increasingly apparent…as other countries dismantle regulatory obstacles and alter tax laws that put them at a disadvantage." In terms of sources of growth, the quotation suggests that some other countries are currently at a disadvantage because of:
A. social capital.
B. human capital.
C. growth-compatible institutions.
D. technology.
Explanation / Answer
In the given extract it has been stated that other countries are not been able to grow at their full potential because of regulatory obstacles and ambiguous and business adverse laws.
Elimination of regulatory obstacles or formulation of business friendly policies and streamlining of tax laws that is making them clear, transparent, and easily applicable can unshackle the economies of these countries and they can grow at much higher pace than they are at present.
Formulation of business-friendly policies or alteration of tax laws to make them clear and transparent is considered to be part of set of institutions or policies that promote growth.
So, in terms of sources of growth, the quotation suggests that some other countries are currently at a disadvantage because of lack of growth compatible institutions.
Hence, the correct answer is option (C).