A nation's economy achieves sustained hyper-growth if and only if it rapidly modernizes its infrastructure while maintaining a low inflation rate. A nation cannot rapidly modernize its infrastructure unless it attracts significant foreign direct investment. Furthermore, any nation that imposes strict capital controls is unable to attract significant foreign direct investment. Finally, all nations that refrain from imposing strict capital controls experience occasional periods of currency volatility.
If the statements above are true, which one of the following must also be true?
- AA nation rapidly modernizes its infrastructure if it attracts significant foreign direct investment.
- BAny nation that maintains a low inflation rate will inevitably achieve sustained hyper-growth.
- Any nation's economy that achieves sustained hyper-growth experiences occasional periods of currency volatility.Answer
- DNations that impose strict capital controls generally experience lower overall economic stability than those that do not.
- EA nation cannot experience occasional periods of currency volatility unless it achieves sustained hyper-growth.
Answer
Any nation's economy that achieves sustained hyper-growth experiences occasional periods of currency volatility.
The correct answer follows from a valid conditional chain constructed from the stimulus. Since sustained hyper-growth guarantees infrastructure modernization, which guarantees attracting foreign investment, which requires refraining from strict capital controls, which inevitably leads to currency volatility, it is absolutely true that any nation achieving sustained hyper-growth will experience currency volatility.
Step-by-Step Solution
Key Concept
Conditional Reasoning and Logical Chaining