Question

19:48 Exit Question 2 5 pts Individual Investment AI DΣ ΑΣ D Average Investment The above diagram represents the Private Decision Function (S-diagram) as discussed in Module 2. Explain the concept of "the big push" by appealing to the above diagram. (Please be brief, aim for 3-7 sentences) 12pt Paragraph BIU

Answer 1

The economic development is not smooth phenomenon because the conditions may vary and there may be lack of coordination between economic agents. The investment in the economy needed to achieve spectacular growth could be marginal and that is why it needs a big impetus or certain minimum level of acceleration known as the 'Big Push' which creates a chain of economic activity.

Rosenstein-Rodan developed this theory of 'Big Push'. In the figure, we can observe that at point A1, the individual investment is lower than the average or expected investment. A 'Big Push' could kick the investment at higher level and could start the economic roller coaster.