Q1+-+Development

===** __Question__: How could industrialized countries best assist less developed countries to achieve higher levels of real income? ****[M 89, 5] **===
 * __Response__:**
 * There are several methods that could be used for a developed country, or industrialized country to help less developed countries. The first and most common suggestion would be to offer aid to the less developed country, such as; Long-term loans that could be used to invest in the less developed country which in turn will allow for a larger capital stock, which will increase the countries output, which will cause incomes to increase and allow for savings to increase as seen by the Harrod-Domar model. On top of that less developed countries like to receive Long-Term loans or Soft loans because it allows them to pay back the loan in there own currency and at a low interest rate and this is beneficial towards them because they do not have to use valuable foreign currencies. Another form of aid that would be useful to increase the less developed countries real income would be to provide a commodity aid. This aid is provided to less developed countries to try and increase productivity. It provides funds to purchase commodities including consumer items, intermediate inputs and industrial raw materials. things such as equipment for factories would be provided with commodity aid and this will increase jobs which in turn will increase the real income of the less developed country.**