One indicator of the low level of cap ital formation in developing countries is

Step 1: Analyze the question The question asks for an indicator (a sign) that capital formation is low in developing countries.

Step 2: Explain the concept Capital formation is the process of increasing a country's stock of capital goods (machinery, factories, roads, equipment). It depends on savings and investment. The chain works like this:

• Low income leads to low savings.
• Low savings lead to low investment.
• Low investment leads to low capital formation.
• Low capital formation leads to low productivity and output, which keeps income low.

This is the "vicious circle of poverty" often discussed in WASSCE Economics.

Step 3: Evaluate each option

• A. Low per capita income. This is a sign of low output and low productivity, which result from a small capital stock. It is the standard indicator of low capital formation in developing countries. ✔
• B. High rate of investment. This would mean high capital formation, the opposite of what the question asks. ✘
• C. Low importation of consumer goods. This has no direct link to capital formation. Developing countries often import many consumer goods. ✘
• D. High rate of household savings. High savings would support capital formation, so it cannot be a sign of low capital formation. ✘

Step 4: Answer The correct option is A. low per capita income.

Tip: When a question asks for an indicator of underdevelopment, look for the negative signs: low income, low savings, low investment, low productivity. Eliminate any option that describes "high" investment or savings, since those are signs of progress.