When a national has very little GDP per person ?
Correct answer: D. it has the potential to grow relatively quickly due to the "catch-up-effect"
- A. it is doomed to being relatively poor forever
- B. none of these answers
- C. an increase in capital will likely have little impact on output
- D. it has the potential to grow relatively quickly due to the "catch-up-effect"
- E. It must be a small nation.
Explanation
A country with low GDP per person may grow rapidly through the catch-up effect, because it can adopt existing technologies and gain large returns from additional capital. Low current income does not imply permanent poverty.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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