Question

Despite being a high saving economy, capital formation may not result is significant increase in
output due to
a) Weak administrative machinery
b) Illiteracy
c) High population density
d) High capital –output ration

Answer 1

Thank you for this question. Please find the answer below: 

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

d) High capital –output ratio.

Without the high capital-output ratio the creation of credit is not possible. Without creation, there would eventually be no credit to save. Hence, high capital-output ratio is essential.

Answer 2

In an economy the following features may all lead to failure of capital output to give the desired amount of money as the end result.

Weak administrative will lead to poor decision making hence poor output result.

Illiteracy is the lack of information about given area hence this can equally cause the the failure.

High population density which is not sustainable can as well lead to the failure in capital output.