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Question

The vicious circle argument points to the connection between ___________.

A
income and population
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B
investment and technology
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C
savings and capital
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D
productivity and capital.
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Solution

The correct option is C productivity and capital.
The vicious circle argument explains the relation between poverty and capital as a circular function of outcomes. So when a country is underdeveloped or poor it's productivity is low, due to this the incomes are low this leads to lower savings low investment and finally capital deficit which in turn is a reason for underdevelopment.

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