Which of the following statements explains the vicious circle of poverty?
A) By investing in education and infrastructure at the same time, the country can overcome the problems of poverty.
B) Poverty arises out of the lack of investment, but countries cannot invest because they are poor.
C) A nation can shift its production possibilities curve inward by shifting more resources into the production of capital goods.
D) A nation can shift its production possibilities curve outward by shifting more resources into the production of consumer goods.

Question

Quizplus · Accepted Answer

The vicious circle of poverty suggests that poverty is a self-perpetuating cycle as poor countries lack the resources to invest in infrastructure and education, which prevents them from developing and growing economically. As a result, they remain poor and continue to lack the resources necessary to invest. This cycle can only be broken if external interventions are made to inject resources and investment into the economy. None of the other options provide an explanation for the vicious circle of poverty.

Which of the Following Statements Explains the Vicious Circle of Poverty