Question

Why do you think it is difficult for high-income countries to achieve high growth rates?

Short answer

Domestic markets in high-income countries are already saturated, implying that supply and demand are in equilibrium, with little room for expansion.

Because their citizens are already well-off, developed countries have less room to improve their citizens' lives.

Step-by-step solution

Step 1. Define growth rate.

The percentage change of a specific variable over time is referred to as growth rates.

Step 2. Why it is difficult for high-income countries to achieve high growth rates?

Because their citizens are already well-off, developed countries have less room to improve their citizens' lives. However, in poor and middle-income countries, a sizable portion of the population still lacks access to basic life necessities. As a result, these developing countries have more room for progress.

Domestic markets in high-income countries are already saturated, implying that supply and demand are in equilibrium, with little room for expansion. Their main purpose is to shift the aggregate supply curve to the right while also promoting a better educated workforce capable of consuming this more supply.