UPSC CSE Prelims
Question 63
Despite being a high saving economy, capital formation may not result in significant increase in output due to
View correct answer and explanation
Correct answer: D
Correct Option: D
Explanation: A high incremental capital–output ratio means large investment is needed to create a small addition to output, so even plentiful savings and capital formation may translate into weak growth.
Option-wise Analysis:
A: Incorrect - Weak administration can hurt performance but is not the precise capital-to-output explanation.
B: Incorrect - Illiteracy may reduce productivity yet does not directly state why high savings fail to yield output.
C: Incorrect - Population density alone does not determine conversion of investment into production.
D: Correct - Correct-a high capital-output ratio signifies inefficient conversion of capital into output.