The Harrod-Domar model states that the growth rate of national income is
The growth rate is positively related to the savings ratio and negatively related to the capital-output ratio. The Harrod-Domar relation is \(g=s/v\), so a larger saving…
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The Harrod-Domar model states that the growth rate of national income is
Answer and explanation
Correct answer B
The growth rate is positively related to the savings ratio and negatively related to the capital-output ratio. The Harrod-Domar relation is , so a larger saving share raises growth while a larger amount of capital required per unit of output lowers it.
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West Bengal SET (WB SET)