Despite being a high saving economy, capital formation may not result in significant increase in output due to
[amp_mcq option1=”weak administrative machinery” option2=”illiteracy” option3=”high population density” option4=”high capital-output ratio” correct=”option4″]
This question was previously asked in
UPSC IAS – 2018
The correct answer is D) high capital-output ratio.
The capital-output ratio (COR) is an economic metric that describes the relationship between the amount of capital invested in an economy and the amount of output it produces. A high COR indicates that a large amount of capital is required to produce a given increase in output.