If for some country the full employment rate of growth of national income is 4 percent per annum and…
Required investment as a share of income equals the incremental capital-output ratio multiplied by the growth rate. Thus \(I/Y=vg=0.12\), meaning net investment of 12% of…
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If for some country the full employment rate of growth of national income is 4 percent per annum and the incremental capital-output ratio is 3:1, then the required net investment as a percentage of national income will be
Answer and explanation
Correct answer A
Required investment as a share of income equals the incremental capital-output ratio multiplied by the growth rate. Thus , meaning net investment of 12% of annual income.
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