Asked by Silvia Sanchez on May 27, 2024
Verified
Refer to Figure 25-2. In what way is the figure relevant to the catch-up effect?
Catch-Up Effect
The theory that poorer economies will tend to grow at a faster rate than wealthier economies and thus converge in terms of income per capita over time.
- Grasp the concept of the catch-up effect and its implications on economic growth.
Verified Answer
JK
Jasleen Kaur ParmarMay 29, 2024
Final Answer :
The catch-up effect is observed when a relatively poor country with little capital and low productivity starts to experience rapid growth. In such a country, small increases in capital substantially raise workers' productivity and make rapid growth possible. In the figure, the production function is relatively steep for small amounts of capital, and that feature is central to the catch-up effect.
Learning Objectives
- Grasp the concept of the catch-up effect and its implications on economic growth.
Related questions
Which of the Following Statements Accurately Describes Catch-Up Growth ...
Studies Confirm That Controlling for Other Variables Such as the ...
If All Firms Expect Greater Demand for Their Products or ...
Long-Term Growth in Production in an Economy Can Be Partially ...
(Figure: Consumer and Capital Goods)Use Figure: Consumer and Capital Goods ...