Which of the Following Describes the Vicious Circle of Poverty

question 206

Multiple Choice

Which of the following describes the vicious circle of poverty?

• A)Government spending for public goods is inflationary, and this undermines incentives to save and invest.
• B)Higher incomes increase consumption at the expense of capital accumulation, which causes income to fall.
• C)Low per capita incomes cause low levels of saving and investment, which mean low productivity and therefore low incomes.
• D)A growing national income increases the demand for money, which increases the interest rate and reduces investment.

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Definitions:

Total Variable Costs

The sum of all costs that vary directly with the level of output produced.

Earrings

Jewelry designed to be worn on the ears, available in various styles and materials.

Variable Input

An input whose quantity varies with production levels, affecting cost and output.

Marginal Cost

The added cost of producing one additional unit of a product or service.