Which statement is consistent with the catch-up effect?
A) The United States had a lower growth rate before 1900 than after.
B) Japan has a higher growth rate than Germany.
C) Although Canada has a relatively high level of output per person, its growth rate is still high compared to some poorer countries, such as Pakistan.
D) After World War II, Canada had lower growth rates than war-ravaged European countries.

Question

Quizplus · Accepted Answer

The catch-up effect, also known as the theory of convergence, suggests that all else being equal, poorer economies tend to grow at faster rates than wealthier economies, allowing them to "catch up" in terms of per capita income. Thus, the statement about war-ravaged European countries growing faster than Canada after World War II is consistent with this theory, as those European countries would have been starting from a lower base and thus had more room to grow rapidly.

Which Statement Is Consistent with the Catch-Up Effect