🎴 Flashcard Mode
Structure of Indian Economy
Card1 / 6
Mastered0
Review0
QuestionClick to flip
The main reason for low growth rate in India, in spite of high rate of savings and capital formation, is
AnswerClick to flip back
A
high capital output ratio
💡 Explanation:
The capital output ratio is used to produce an output over a period of time. This ratio has a tendency to be high when capital is cheap as compared to other inputs. For instance, a country with abundant natural resources can use its resources in lieu of capital to boost its output. Hence, the resulting capital output ratio is low.