Two years later still, you work for a company that is considering expanding its sales and production into either Baconia or its neighboring country, FrenchToastia. The company ultimately wants to locate in a country that is most conducive to economic growth.

One of your coworkers mentions that Baconia is vulnerable since it has a robust international trade sector and that new industries are frequently rendering older industries obsolete, leading to some unemployment. FrenchToastia, on the other hand, does not trade much with foreign countries and has government support programs for established industries and businesses. Given this information, which country seems a preferable choice for your company?

Select one:

a.

Baconia is a better choice since its trade vulnerability will eventually lead it to isolate itself from foreign competition, which will be better for economic growth.

b.

Baconia is preferable since it is better suited for economic growth than FrenchToastia.

c.

FrenchToastia is preferable since it actively tries to prevent unemployment

d.

FrenchToastia is a better choice since it stays independent of foreign competition.

Recently, Baconia has increased the size of its government and regulations and has adopted import quotas to limit foreign competition; at the same time, FrenchToastia has reformed its judicial system to better enforce property rights, and its central bank has vowed to keep inflation in check. Based on this information alone (ignore the information in part a), which country seems a preferable choice for your company?

Select one:

a.

Both countries' institutional changes will make them less likely to grow, so it isn't clear which country is best.

b.

Baconia's institutional changes make it less likely to grow, while FrenchToastia's reforms make it more likely to grow.

c.

Baconia's institutional changes make it more likely to grow, while FrenchToastia's reforms make it less likely to grow.

d.

Both countries' institutional changes will make them more likely to grow, so it isn't clear which country is best.