The trade-off between current consumption and investment in the capital and research that contributes to economic growth and higher future income: is more severe for wealthy countries due to decreasing returns to capital. is more severe for poor countries due to increased opportunity cost. is less severe for poor countries due to decreasing returns to capital. is equally severe for wealthy countries and poor countries.

Question

Camryn Liu

Business

25 April, 19:56

The trade-off between current consumption and investment in the capital and research that contributes to economic growth and higher future income: is more severe for wealthy countries due to decreasing returns to capital. is more severe for poor countries due to increased opportunity cost. is less severe for poor countries due to decreasing returns to capital. is equally severe for wealthy countries and poor countries.

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Answers (1)

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Atticus Walker · Answer 1

The trade-off is more severe for poor countries due to increased opportunity cost.

Explanation:

Poor countries do not have much resources to choose from and as such, find it more difficult to find a balance between consumption and investment the capital presently, and carrying out research that will increase income in future and contribute to the the growth of the economy.

By choosing one course of action, poor countries have to forgo another option and this comes at a high cost to them.