Question: Answer the following question using economic theory covered in this lesson. Make sure you answer all parts of the question.

(a) Among the problems that hinder growth in developing economies are poor infrastructure, lack of financial institutions and a sound money supply, a low saving rate, poor capital base, and lack of foreign exchange. Explain how these problems are interconnected.

(b) What are the arguments for using real per capita GNI to compare living standards between countries? What weakness does this measure have?