Question

Imagine two countries A and B in the year 2004.

Country A focuses on expanding on its scale of production and achieving economic progress. Country B focuses on employing new technologies in production and achieving economic development. Additionally, the per capita income of A is $748,andthepercapitaincomeofBis$713.

Choose the correct option.

• A. Both A and B are developing economies.
• B. Both A and B are developed economies.
• C. A is a developed economy, but B is a developing economy.
• D. A is a developing economy, but B is a developed economy.

Answer 1

The correct option is C A is a developed economy, but B is a developing economy.

In 2004, the World Bank released a development report which categorised countries having a per capita income of less than $735 as developing economies. Developing countries need to concentrate on improving their methods of production in order to achieve economic development. Developed countries are likely to have improved their production methods and can afford to focus on just economic progress. In other words, they would have the means to focus only on the scale of production.