(I) Countries with high rates of investment also tend to have high rates of growth. (II) A country with a high rate of investment but a poorly functioning capital market will tend to have a lower rate of growth than a country with a comparable rate of investment but a capital market that functions well.

Question

Quizplus · Accepted Answer

Both statements are true. Statement I is a commonly accepted relationship between investment and economic growth. Statement II is also true, as a poorly functioning capital market can hinder the allocation of resources and limit the effectiveness of investment, leading to lower growth rates.

(I) Countries with High Rates of Investment Also Tend to Have