What does the Vicious Circle theory suggest about poverty?

Multiple choice question for Theories of Economic Development. Select an option, then review the explanation below.

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A nation remains poor due to low productivity despite high levels of savings.Wealthier countries tend to reduce their savings rates over time.Poverty sustains itself through interconnected cycles affecting both supply and demand.Less Developed Countries (LDCs) have a large market size.

Explanation

The Vicious Circle theory explains that poverty continues to exist because it creates self-reinforcing loops on both the supply and demand sides, making it difficult for economies to break free from poverty traps.

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What does the Vicious Circle theory suggest about poverty?

Explanation

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