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Chapter 19: Q 24. (page 472)

Explain why is it difficult to set aside funds for investment when you are in poverty.

Short Answer

Expert verified

When a person is poor, it is difficult to set aside funds for investing. Whatever little money one has is quickly spent on basic survival essentials such as food, water, clothing, and so forth

Step by step solution

01

Step 1. Define poverty.

A lack of material belongings or a low amount of income is classified as poverty. A range of social, economic, and political variables can contribute to poverty.

02

Step 2. Why is it difficult to set aside funds for investment when you are in poverty.

When a person is poor, it is difficult to set aside funds for investing. The low-income poverty trap is the term for this condition. Whatever little money one has is quickly spent on basic survival essentials such as food, water, clothing, and so forth. Even the most fundamental standards are not always provided. As a result, creating savings for future investments would be impossible in such a scenario.

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Most popular questions from this chapter

Demography can have important economic effects. The United States has an aging population. Explain one economic benefit and one economic cost of an aging population as well as of a population that is very young.

Using the data in Table 19.3, rank the seven regions of the world according to GDP and then according to GDP per capita

Region
Population (in millions)
GDP Per Capita
GDP = Population 脳 Per Capita GDP (in millions)
East Asia and Pacific2,006\(5,536\)10,450,032
South Asia1,671\(1,482\)2,288,812

Sub-Saharan Africa936.1\(1,657\)1,287,650

Latin America and Caribbean588\(9,536\)5,339,390

Middle East and North Africa345.4\(3,456\)1,541,900

Europe and Central Asia272.2\(7,118\)1,862,384

Table 19.3 GDP and Population of Seven Regions of the World

Retrieve the following data from The World Bank database (http://databank.worldbank.org/data/ home.aspx) for India, Spain, and South Africa for the most recent year available:

鈥� GDP in constant international dollars or PPP

鈥� Population

鈥� GDP per person in constant international dollars

鈥� Mortality rate, infant (per 1,000 live births)

鈥� Health expenditure per capita (current U.S. dollars)

鈥� Life expectancy at birth, total (years)

What strategies did the East Asian Tigers employ to stimulate economic growth?

Prepare a chart that compares India, Spain, and South Africa based on the data you find. Describe the key differences between the countries. Rank these as high-, medium-, and low-income countries, explain what is surprising or expected about this data.
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