Answer to Question #283507 in Economics for Praga

Question

Out of these options, based on our course, which would be an effective remedy to the problem of zombie firms in East Asian economy？

A) By raising wages, interest-rates, and RMB exchange-rates gradually, to increasing the household income share of GDP and push zombie firms into bankruptcy, while exchanging state assets for banks’ liabilities.

B) By raising national savings and attracting larger flows of foreign capital into China’s financial sector to boost investment and jobs in industry 4.0.

C) By cancelling debts and nationalizing industries for planned production

Answer 1

Raising wages, interest-rates, and RMB exchange-rates gradually, to increasing the household income share of GDP and push zombie firms into bankruptcy, while exchanging state assets for banks’ liabilities would be an effective remedy to the problem of zombie firms in East Asian economy.

So, the correct answer is A.