Question

Johnsonville is a small and poor nation, but its current president has a genuine desire to create more wealth for Johnsonville's citizens. The president has received recommendations from several of her advisors. Which of the following recommendations is likely to create the most wealth for Johnsonville?

a) Implementing higher taxes on citizens
b) Attracting foreign investments
c) Reducing public services
d) Implementing strict trade barriers

Answer 1

Attracting foreign investments is the best recommendation for creating wealth in Johnsonville because it brings in external capital and expertise that can stimulate economic growth and development.

Step-by-step explanation:

The recommendation that is likely to create the most wealth for Johnsonville, a small and poor nation, is attracting foreign investments. By creating a stable macroeconomic and political environment, improving health and education, and adopting market-oriented policies, Johnsonville can foster conditions that are conducive to foreign investment, which in turn would bring capital, technology, and expertise into the country. Attracting foreign investments is more likely to establish a sustainable economic growth path compared to the alternative options such as imposing higher taxes, which could stifle economic activity, reducing public services, which could harm the population's well-being, or implementing strict trade barriers, which could hinder international economic relations and the inflow of foreign capital.