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Question

Q. The ICOR (incremental capital-output ratio) of country A increased from 3 in 2000 to 3.5 in 2010. Which of the following statements is/are correct about country A?

Which of the statements given above is/are correct?


A
1 only
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B
2 only
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C
Both 1 and 2
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D
Neither 1 nor 2
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Solution

The correct option is D Neither 1 nor 2

Explanation:

ICOR = CapitalProductivity

Statement 1 is incorrect. Higher ICOR means lower productivity.

Statement 2 is incorrect. Reasons for high ICOR: Unskilled Labour, Non-professional management, Obsolete Technology, Lack of Competition.


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