The Convergence Theory Is Based on the Idea Of

question 60

Multiple Choice

The convergence theory is based on the idea of:

• A) decreasing marginal returns.
• B) decreasing income per capita.
• C) increasing rates of income per capita.
• D) increasing opportunity costs.

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Definitions:

Saving

The portion of income not spent on current consumption, often put aside for future use or investments.

Disposable Income

Funds available to households for saving and spending once income taxes are deducted.

APC

Average Propensity to Consume, which is the fraction of income spent on consumption.

Gross Investment

The total amount of capital expenditure a company spends on maintaining and increasing the scope of its operations.