Q50.
Despite being a high saving economy, capital formation may not result in significant increase in output due to
Answer
D
Explanation
Capital output ratio is the amount of capital needed to produce one unit of output. For example, if investment is 32% of GDP and economic growth is 8%, Capital output ratio is 32/8 = 4. If the capital-output ratio is high, there will not be significant increase in output despite high savings and investment.