|Consider the following statements regarding Capital Output Ratio (COR).|
|1. High Capital Output Ratio (COR) means the capital available is cheaper than other inputs.|
|2. High Capital Output Ratio (COR) means the capital available is costlier than other inputs.|
|3. When the country uses natural resource instead of capital, COR reduces.|
|4. Attracting capital through FBI, FII denotes the low capital output ratio of India.|
|Which of the statements given above are correct?|
A) 1, 3 and 4
B) 2, 3 and 4
C) 1 and 4
D) 2 and 4
Correct Answer: A
Solution :[a] COR, will be high, when the capital available is more i.e. cheaper than other resources. So, Statement 1 is correct and 2 is wrong. Because of low COR, India needs capital to fulfil the commitments. So, FDI, FII are used as a means for this. When we use FDI, FII, we are attracting capital to fill the gap in capital.
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