Which of the following is a strategy that Country M is planning to use to encourage economic growth?

• A. Investing in infrastructure and education
• B. Reducing government spending on public services
• C. Implementing strict price controls on all goods
• D. Increasing trade barriers and tariffs

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of economic growth, which refers to an increase in a country's production of goods and services over time, often measured by the growth rate of real GDP.
2. Step 2: Recognize that strategies to encourage economic growth typically involve improving factors that enhance productivity, such as investing in physical capital (infrastructure) and human capital (education).
3. Step 3: Analyze each option: reducing government spending on public services may harm growth by cutting essential services; strict price controls can distort markets and reduce incentives; increasing trade barriers usually limits market access and efficiency.
4. Step 4: Identify that investing in infrastructure and education directly supports economic growth by improving the efficiency of production and the skills of the workforce.
5. Step 5: Conclude that the strategy Country M is planning to use to encourage economic growth is investing in infrastructure and education, as it aligns with economic theory and empirical evidence on growth drivers.