Which of the following is a common feature of poor countries? (Select all correct answers.)ResponsesA limited capital stockslimited capital stocksB diminishing returns to capitaldiminishing returns to capitalC political repressionpolitical repressionD poor educational systems
Question
Which of the following is a common feature of poor countries? (Select all correct answers.)ResponsesA limited capital stockslimited capital stocksB diminishing returns to capitaldiminishing returns to capitalC political repressionpolitical repressionD poor educational systems
Solution
The common features of poor countries can include:
A. Limited capital stocks: Poor countries often lack the financial resources or assets to invest in businesses, infrastructure, and other areas that could stimulate economic growth.
D. Poor educational systems: Education is a key factor in economic development. Poor countries often have underfunded, inadequate educational systems, which can limit human capital development and economic growth.
C. Political repression: While not exclusive to poor countries, political repression can contribute to economic instability and poverty. It can deter foreign investment, limit economic freedom, and lead to other problems.
B. Diminishing returns to capital: This is not necessarily a common feature of poor countries. The concept of diminishing returns to capital means that as more capital is invested, the additional output produced from each additional unit of capital decreases. This is a concept that can apply to any economy, not just poor ones.
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