In Harrod-Domar model, if the growth rate of income is 5% and capital-output ratio is 3, then saving…
In the Harrod-Domar model, the growth rate g = s ÷ v, where s is the saving rate and v the capital-output ratio. So s = g × v = 5% × 3 = 15%. A saving rate of 5% or 8% would…
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In Harrod-Domar model, if the growth rate of income is 5% and capital-output ratio is 3, then saving rate must be :
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Correct answer D
In the Harrod-Domar model, the growth rate g = s ÷ v, where s is the saving rate and v the capital-output ratio. So s = g × v = 5% × 3 = 15%. A saving rate of 5% or 8% would give growth of only about 1.7% or 2.7% with a capital-output ratio of 3.
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UGC NET Economics