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Assignment #2 and D2.docx

Assignment #2 and D2.docx - Taylor Hitchcock Assignment#2 1...

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Taylor Hitchcock 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 the Harrod Domer Model, as if it was, 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 (s) divided by the capital-output ratio (k). In this situation the country can only expect a growth rate of 5% or half of their desired goal. 2. These questions are on the Lewis Model.
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(i) The traditional sector can produce a maximum of 100 million kg of food. Suppose the number of workers in this sector is 75 million. Then, what would be the wage rate in the traditional
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