The three categories used by the World Bank to classify nations on the basis of

Question

The three categories used by the World Bank to classify nations on the basis of national income per capita are low growth, medium growth, and high growth, below average, average, and above average, developing, developed, and growth, low-income, medium-income, and high-income. Real capital is supposed to earn a higher return where it is scarce. However, most international investment flows to the lACs where capital is relatively abundant, rather than to the DVCs where capital is very scarce. This is true because the return on investment is higher in lACs because of superior infrastructure and workforce. per capita income is lower in the DVCs. the governments of DVCs do not allow investment. lACs have a larger number of risky investments that increase the return on investment. Civil wars, population growth, and public policy decisions have contributed to periodic famines in Africa. This is because population growth increases the labor force and lowers wages. civil conflicts divert resources from civilian uses. there is insufficient reliance on international aid. public expenditures on agriculture should be made in urban areas instead. If two nations have different per capita income levels and their rates of economic growth are identical, then the absolute per capita income differential: will remain constant, may either widen or diminish, will diminish, will widen. Small loans to entrepreneurs and small business owners in DVCs are referred to as: human capital development projects, microfinance. capital flight promotion systems, incubator lending. In recent years U.S. foreign aid has been: less than 1 percent of its output, about 2 percent of its output, about 3 percent of its output, about 5 percent of its output.

Explanation / Answer

1. low-income, medium-income and high-income

2.

3. Civil conflicts divert resource from civilian uses

4. will diminish

5. microfinance

6. about 3 percent of its output

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