According to the supply side of the vicious circle theory of development a country is poor because ?
Correct answer: B. it was previously too poor to save and invest
- A. technology levels do not allow for self sufficiency
- B. it was previously too poor to save and invest
- C. underemployment is too widespread
- D. resource allocation is poor
Explanation
On the supply side, poverty persists because low past incomes prevented sufficient saving and investment, leaving the economy with little capital and low productivity. This reproduces low income in the next period.
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