The idea that suggests that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the capital stock that would help them grow is ?
Correct answer: A. the vicious circle of poverty hypothesis
- A. the vicious circle of poverty hypothesis
- B. the dependency theory
- C. neo-colonialism
- D. the under-consumptionist hypothesis
Explanation
The vicious circle of poverty describes how low income leads to low saving and investment, which keeps productivity and income low. This self-reinforcing cycle prevents the capital accumulation needed for sustained growth.
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