Which of the following is a reason why economic openness contributes to long term economic growth? A. Foreign savings can be used to finance investment in new capital and research and development. B. Increase in import tariffs C. Openness provides businesses with the opportunity to profit from currency trading. D. Import quotas

The correct answer is A.

Economic openness refers to the degree to which a country is open to trade with other countries. This can contribute to long-term economic growth in several ways:

A. Foreign savings can be used to finance investment in new capital and research and development. This is a direct way in which economic openness can contribute to economic growth. By allowing foreign investment, a country can increase its capital stock and improve its technology, both of which can lead to higher productivity and economic growth.

B. An increase in import tariffs is not a characteristic of economic openness. In fact, it is the opposite. Tariffs are a form of trade barrier that restricts economic openness.

C. While openness may provide businesses with the opportunity to profit from currency trading, this is not a direct contributor to long-term economic growth. Currency trading is more about short-term financial gains rather than long-term productive capacity of an economy.

D. Import quotas, like tariffs, are a form of trade barrier that restricts economic openness. They do not contribute to long-term economic growth.

Therefore, the correct answer is A. Foreign savings can be used to finance investment in new capital and research and development.