CFA CFA Level 1 CFA Level 1 Question of the Week – Economics

CFA Level 1 Question of the Week – Economics

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    • Matt_AnalystPrep
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      Relatively small increases in capital investment in developing economies with large populations, such as China in the 1990s, are most likely to produce:

      • A. large percentage increases in real GDP.
      • B. very large percentage increases in GDP per capita growth rates in the
        long term.
      • C. very large nominal increases in GDP per capita.
    • Matt_AnalystPrep
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      The correct answer is A.

      If an economy has a low output level, then a minor improvement in production has a large percentage impact. To illustrate, if you have a million dollars, presenting you with another dollar has a near-zero impact on your wealth. But, if you have only one dollar and are presented with another dollar, that is a one hundred percent improvement in your wealth. China has a very large population and, in the past, had comparatively little capital.

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