If \( \frac{\Delta Y}{Y} \) is rate of growth of GDP; S is Net National Savings Ratio and C is National…
The simplified Harrod-Domar relationship is \(\frac{\Delta Y}{Y}\) \(=\frac{S}{C}\). Net saving finances net capital formation, so \(SY=\Delta K=C\Delta Y\); dividing by…
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If is rate of growth of GDP; S is Net National Savings Ratio and C is National Capital-Output Ratio, then which of the following is a simplified version of the famous equation in Harrod-Domar theory of economic growth ?
Answer and explanation
Correct answer C
The simplified Harrod-Domar relationship is . Net saving finances net capital formation, so ; dividing by gives the growth rate as the savings ratio divided by the capital-output ratio.
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Madhya Pradesh SET (MP SET)