As Developing States Become Richer, How Do Their Spending Patterns

question 33

Multiple Choice

As developing states become richer, how do their spending patterns on social policy shift?

• A) Increased spending in absolute terms but decreased spending in relative terms
• B) Decreased spending in absolute terms but increased spending in relative terms
• C) Increased spending in absolute and relative terms
• D) Decreased spending in absolute and relative terms
• E) There is no strong correlation between rising wealth and spending on social policy.

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Definitions:

Expenditures

Money spent on goods, services, or other expenses.

Scale Economies Index

A measurement that assesses the advantages a business gains due to the scale of its operation, typically resulting in reduced costs per unit as production increases.

Cost-Output Elasticity

The responsiveness of the cost of producing a good or service to changes in the level of output.

Diseconomies of Scale

A situation where a business grows so large that the costs per unit increase. It occurs when economies of scale no longer function for a firm.