Question

85. The ‘Catch Up Effect’ is an economic theory that suggests

• A. All economies in time will converge in terms of per capita income
• B. Resource-rich countries’ growth rates are far ahead than those of their resource-poor counterparts
• C. Reverse engineering is key to improving per capita incomes rapidly
• D. Consumers are forced in subtle ways to increase their overall power consumption so that the country can be classified as a rapidly growing economy

Answer 1

The correct option is A All economies in time will converge in terms of per capita income

Catch Up Effect: A theory speculating that, since poorer economies tend to grow more rapidly than wealthier economies, all economies in time will converge in terms of per capita income. In other words, the poorer economies will literally “catch-up” to the more robust economies.