Developing countries are said to experience a "vicious circle of poverty." This means people
A) save little, thus they invest little in new plant and human capital, so they remain poor
B) work little, thus they cannot afford to buy necessities or a home, so they leave the area
C) invent new technology, lowering the prices of goods, so they become poorer
D) improve their education, become overqualified for available jobs, and are not hired

Question

Quizplus · Accepted Answer

The "vicious circle of poverty" refers to a cycle where low income leads to low savings, which in turn leads to low investment in both physical and human capital. This lack of investment keeps the economy stagnant or growing very slowly, perpetuating the state of poverty.

Developing Countries Are Said to Experience a "Vicious Circle of Poverty