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Generate QuizA high Incremental Capital-Output Ratio (ICOR) indicates that an economy is highly efficient in converting capital investments into additional economic output.
- True
- False
Answer: False
ICOR measures the additional unit of capital required to produce one additional unit of output. Therefore, a *low* ICOR signifies high efficiency, advanced technology, and good infrastructure. Conversely, a *high* ICOR indicates inefficiency, structural bottlenecks, and poor capital utilization, meaning massive investments yield relatively little economic growth.