The major factor in investors' ability to finance the new industrial system was ______.

• A. the development of financial markets and institutions
• B. the increase in government subsidies
• C. the reduction in labor costs
• D. the rise in agricultural productivity

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the context of the question, which relates to the factors enabling investors to finance a new industrial system. This involves identifying what mechanisms or changes allowed investors to gather and allocate capital effectively.
2. Step 2: Recognize that financing large industrial projects typically requires access to capital markets where funds can be raised, such as through banks, stock markets, or other financial institutions.
3. Step 3: Analyze each option in terms of its role in financing: government subsidies provide direct support but are not the primary mechanism for widespread investment; reduction in labor costs and rise in agricultural productivity affect production costs and output but do not directly facilitate financing.
4. Step 4: Focus on the development of financial markets and institutions, which create the infrastructure for mobilizing savings, pooling risk, and channeling funds from savers to investors, thus enabling large-scale industrial investment.
5. Step 5: Conclude that the major factor in investors' ability to finance the new industrial system is the development of financial markets and institutions, as they provide the essential framework for capital accumulation and allocation.