Question

According to the convergence hypothesis, as the rate of technological adoption rises in poorer countries,

a.the flow of net exports can be reduced

b.the gap between wealthy and poor countries close

c.income inequality rises

Answer 1

Answer- Correct option is 'b'

According to the convergence hypothesis, as the rate of technological adoption rises in poorer countries, the gap between wealthy and poor countries close. When countries with the lower levels of GDP per capita catch up to countries with higher level of GDP per capita, the process is called convergence. The idea of the convergence in economics is the hypothesis that poorer economies' per capita incomes will tend to grow at faster than richer economies. As a results, the gap between wealthy and poor countries close.