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    Solow graph

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    (a) Foreign aid helps countries to improve the economic condition of less developed or the developing. But when it comes to the income and consumption, the biggest concern is the appropriate and effective use of foreign aid. As we know that in less developed or the developing countries there are a big gap between the reach people and the poor people leaving behind the poverty line. Now if a country with this gap receives foreign ad then the impact of this foreign aid on the income level will mainly depend on the distribution of this foreign aid keeping the income inequality in mind. So distribution of foreign aid is the main factor that will decide its immediate impact on the income level of the country. Now if the income level gets improved due to a well managed distribution of foreign aid then automatically consumption of the country will increase in an effort to increase the standard of living of the ...

    Solution Summary

    The Solow graph in the economic aid is depicted in the solution.