Question

Low capital formation is referred to as __________.

• A. capital deficiency
• B. capital surplus
• C. capital malnourishment
• D. capital deformation

Answer 1

The correct option is A capital deficiency

Lack of investment results in low capital formation where the country will not have enough money to develop infrastructure like roads, bridges, railways, industries, and machinery. This state of low capital formation is called capital deficiency. It reflects lower production in the nation, resulting in fewer jobs and, therefore, lower income levels.