Question

Which one of the following is NOT a feature of developing economy?

• A. High rate of unemployment.
• B. High rate of population growth.
• C. High rate of capital formation.
• D. Widespread poverty.

Answer 1

Answer: (C)

High rate of capital formation.

The capital formations really signify a very significant part of economic development. This earnings manufacture and growth of more capital goods, such as machines, tools, factories, buildings, raw materials, fuels, etc., which are to be additionally used in producing more goods.

Resources creation does not mean enlarge in money capital, but it actually refers to increase in physical capital, i.e., machinery, factories, transport equipment, bridges, power projects, dams, irrigation systems, etc.

To sum up, capital formation implies the making of real assets. Low per capita real profits is one of the most defining qualities of developing economies.

The correct answer is C.