The catch-up effect is the idea that:
A)savings will always 'catch up' with investment spending
B)other countries aid relatively poor countries so as to 'catch them up'
C)it is easier for a country to grow fast if it starts out relatively poor
D)if investment spending is low, increased savings will help investment to 'catch up'

Question

Quizplus · Accepted Answer

The catch-up effect suggests that countries that start out relatively poor will experience more rapid economic growth than countries that start out wealthier. This is because poorer countries have more room for improvement and can often quickly adopt new technologies and catch up to the levels of productivity and income of wealthier nations. This effect was first identified by economists in the mid-20th century and has been supported by numerous empirical studies since then.

The Catch-Up Effect Is the Idea That