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Economy2018
Despite being a high saving economy, capital formation may not result in significant increase in output due to:

Explanation

The option of a "high capital-output ratio" is correct because it indicates that a large amount of capital is required to produce a relatively small increase in output. In a high saving economy, while there may be substantial investment in capital goods, inefficiencies in production processes or outdated technology can lead to a situation where the new capital doesn't translate into proportional increases in productivity. This scenario suggests that simply accumulating capital is insufficient for enhancing economic growth, as effective utilization of resources and technological advancements are critical for optimizing output.

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