. The Harrod-Domar model from class assumes that a. the savings rate increases w

Q: The Harrod-Domar model from class assumes that a. the savings rate increases w

1. It is “d”; capital grows as the same rate as output. This model suggests that the economic growth of a country depends on the relationships between savings, investments, and capital formation. Here, output indicates the income. The ratio between capital and income indicates capital ratio. The ratio is assumed to be same or constant all the time.

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Question

. The Harrod-Domar model from class assumes that a. the savings rate increases with income. b. the production function has increasing returns to scale. c. depreciation is always zero. d. capital grows at the same rate as output 2. Growth in the Harrod-Domar model depends on a. b. c. d. the growth rate of technology and depreciation. the growth rate of labor and the savings rate. the savings rate, the capital to output ratio, and depreciation. None of the above are completely correct 3. The Harrod-Domar model is missing which of the following: a. capital. b. technology. c. labor. d. Both b and c

Explanation / Answer

It is “d”; capital grows as the same rate as output.

This model suggests that the economic growth of a country depends on the relationships between savings, investments, and capital formation.

Here, output indicates the income. The ratio between capital and income indicates capital ratio. The ratio is assumed to be same or constant all the time.

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. The Harrod-Domar model from class assumes that a. the savings rate increases w

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