Which of the following describes the vicious circle of poverty?
A)Government spending for public goods is inflationary, and this undermines incentives to save and invest.
B)Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall.
C)Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes.
D)A growing national income increases the demand for money, which increases the interest rate and reduces investment.

Question

Quizplus · Accepted Answer

The vicious circle of poverty is described by the situation where low per capita incomes lead to low levels of saving and investment, which in turn result in low productivity and therefore maintain low incomes. This creates a cycle that is difficult to break without external intervention or significant changes in economic policy or conditions.

Which of the Following Describes the Vicious Circle of Poverty