Asked by sachdeva prince on May 30, 2024
Verified
The catch-up effect refers to the idea that
A) saving will always catch-up with investment spending.
B) it is easier for a country to grow fast and so catch-up if it starts out relatively poor.
C) population eventually catches-up with increased output.
D) if investment spending is low, increased saving will help investment to "catch-up."
Catch-Up Effect
The hypothesis that poorer economies' per capita incomes will tend to grow at faster rates than richer economies, allowing them to "catch up" over time.
- Analyze the impact of government policies on economic growth, including trade barriers and investment flows.
Verified Answer
ZK
Zybrea KnightJun 04, 2024
Final Answer :
B
Explanation :
The catch-up effect suggests that poorer nations can grow more rapidly than wealthier nations, allowing them to "catch up" in terms of economic development. This is because they can adopt existing technologies and practices from wealthier countries without having to develop them from scratch.
Learning Objectives
- Analyze the impact of government policies on economic growth, including trade barriers and investment flows.