Question

The Harrod-Domar Growth Model emphasizes the importance

Q: Answer-The Harrod-Domar Growth Model emphasizes the importance of saving and capital accumulation for econo...

Solution The Harrod-Domar model is fundamentally an identity derived from the relationship between saving, investment, and capital Growth Rate gCapital-Output Ratio cRate of Saving s Mathematically, IsY and IK. Growth in output YY is proportional to capital accumulation KK. Since KYc capital-output ratio is constant, YYKKYKKY1csYYsc.

of saving and capital accumulation for economic growth. The model concludes that the rate of output growth (g) is determined by:

A The rate of technological progress and the rate of depreciation.

B The rate of saving (s) divided by the capital-output ratio (c).

C The rate of saving (s) multiplied by the capital-output ratio (c).

D The rate of population growth plus the rate of technological progress.

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