Other Things Equal,relatively Poor Countries Tend to Grow

question 13

Multiple Choice

Other things equal,relatively poor countries tend to grow

• A)slower than relatively rich countries;this is called the poverty trap.
• B)slower than relatively rich countries;this is called the fall-behind effect.
• C)faster than relatively rich countries;this is called the catch-up effect.
• D)faster than relatively rich countries;this is called the constant-returns-to-scale effect.

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Definitions:

NPV

Net Present Value, a calculation used to determine the present value of an investment's expected future cash flows compared to its initial cost.

Internal Rate

Refers to the internal rate of return (IRR), a financial metric used to estimate the profitability of potential investments.

Cash Flows

The entire sum of funds moving into and exiting a business, particularly impacting its liquidity and comprehensive financial well-being.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash flow.