Which of the following is not an assumption of Domar’s model of economic growth?
Domar’s growth model assumes a closed economy without government activity, equal average and marginal propensities to save, and a constant ratio of capital stock to output.…
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Which of the following is not an assumption of Domar’s model of economic growth?
Answer and explanation
Correct answer B
Domar’s growth model assumes a closed economy without government activity, equal average and marginal propensities to save, and a constant ratio of capital stock to output. Presence of government is therefore not one of its assumptions.
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