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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