The Harrod Domar growth model suggests that growth is ?
Correct answer: A. directly related to savings and inversely related to the capital/output ratio
- A. directly related to savings and inversely related to the capital/output ratio
- B. directly related to the capital/output ratio and inversely related to savings
- C. indirectly related to savings and the capital/output ratio
- D. directly related to savings and the capital/output ratio
Explanation
In the Harrod-Domar model, the growth rate is approximately g = s/v, where s is the saving rate and v is the capital-output ratio. Growth therefore rises with saving and falls when more capital is needed per unit of output.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
Practise Macroeconomics
1,499 free Macroeconomics MCQs from Economics, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Economics questions like this
Economics is on 3 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Macroeconomics questions
The Vicious circle theory indicates that ?
For Rosentein Rodan a major indivisibility is in ?
What is Baran's explanation for underdevelopment in Asia, Africa, and Latin America ?
Baran's Neo-Marxist thesis has been criticized for ignoring the probability that power is frequently ?
Criticisms of Rostow's stages of development include ?
The Lawis model explains how growth gets started in a less developed economy ?