The "vicious circle of poverty" for developing nations can best be described by
A) low levels of international trade that reduce exports and increase the dependence on imports.
B) low incomes that inhibit saving and the accumulation of real and human capital, making it diﬃcult to increase productivity and income.
C) a large government sector, which reduces the availability of private investment spending but increases macroeconomic stability.
D) a lack of entrepreneurial talent that limits the formation of businesses and the development of private businesses.

Question

Quizplus · Accepted Answer

The "vicious circle of poverty" refers to the fact that low incomes inhibit saving and the accumulation of real and human capital, making it difficult to increase productivity and income. This, in turn, perpetuates low levels of economic development and poverty. The cycle must be broken through interventions that increase investment, productivity, and incomes. The other options are not directly related to the vicious cycle of poverty.

The "Vicious Circle of Poverty" for Developing Nations Can Best