Econ Assignment 2 - Assignment#2 1 A countrys national...

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Assignment #2 1. A country’s national saving is 20% of its national income and it needs $4 worth of capital for producing $1 worth of goods and services on the average. The economic planners want the country to grow at the rate of 10% per annum and expect that there will be no shortage of labor in the growth process. Is this growth rate consistent with what you have learned from the Harrod Domar Model? If not, how can the planners make a plan to achieve a 10% growth rate? This growth rate is not consistent with what I have learned from the Harrod Domar Model. If it were to follow the rules of this model, to have a growth rate of 10%, the country would need to increase their national savings from 20% to 40% as the growth rate is determined by national savings, or s, divided by the capital-output ratio, or k. With what they have planned now, they can expect a growth rate of 5%, which is half of what they are going for.
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