Economics · Vicious Circle of Poverty
Given below are two statements: one is labelled as Assertion A and the other is labelled as Reason R. Assertion A: The demand-side mechanism of the Vicious Circle of Poverty specifies that a country's low income limits purchasing power, which inherently restricts market size and subsequently discourages investment. Reason R: The Vicious Circle of Poverty operates strictly as a demand-side phenomenon, meaning that factors such as low savings and low capital formation on the supply side are excluded from this self-perpetuating cycle. In the light of the above statements, choose the most appropriate answer from the options given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Both A and R are correct and R is the correct explanation of A
- 2A is correct but R is not correct✓
- 3Both A and R are correct but R is NOT the correct explanation of A
- 4A is not correct but R is correct
Correct answer
A is correct but R is not correct
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