The vicious circle theory states that __________ .
A)Growing government assistance creates addiction to welfare programs.
B)Low income levels create pressure for money creation.
C)Low income levels create pressure for cheap imports.
D)Low per capita income creates low savings that keep incomes low.

Question

Quizplus · Accepted Answer

The vicious circle theory, in the context of economic development, posits that low per capita income leads to low levels of saving, which in turn results in low levels of investment and thus keeps income levels low. This cycle perpetuates itself, making it difficult for economies to break out of poverty.

The Vicious Circle Theory States That __________