Question

Insufficient capital formation can limit the economic growth of developing nations by

A. denying their governments necessary tax revenues.

B. giving workers an excuse to be inefficient.

C. encouraging exploitation by foreign interests.

D. constraining the productivity of labor and holding back national output.

Economic growth in developing nations may be hindered by human resources that are

A. unhealthy or exposed to disease.

B. poorly educated and trained.

C. unable to form trade unions.

D. all of the above.

E. A and B only.

A lack of social overhead capital can limit the economic growth of developing nations by

A. impeding the productive use of other resources.

B. giving governments an excuse to impose high taxes.

C. discouraging entrepreneurs from undertaking projects.

D. all of the above.

E. A and C only.

Answer 1

Question 1

Option D is correct - Constraining the productivity of labor and holding back national output

Capital act as a complementary for the labor in the production process by increasing its efficiency and productivity. Capital such as heavy machinery can help increase the productivity of labors by decreasing the time for producing each unit. It thus help increase the national output.

Hence we can say that inefficient capital formation can limit economic growth by constraining the productivity of labor and holding back national output.

Question 2

Option E is correct - A and B only

Human resource is the human capital that is used in the production process and working of the economy. For having economic growth in a developing nation, human capital should be healthy, educated and well trained. Only then human capital could work efficiently.

Question 3

Option E is correct - A and C only

Social overhead capital includes basic infrastructure like roads , electricity, health , defense, educational institutions, health centers etc. These are those basic infrastructure without which no production activity can happen in a country.

Thus lack of social overhead capital may lead to prevention of productive use of other resources and may even discourage entrepreneurs from undertaking projects.