ECN115B Final Study Guide

ECN115B Final Study Guide - Study Sheet for the Final Exam...

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Study Sheet for the Final Exam Economics 115B 1. Overview a. Know the definition of a Malthusian trap. Fixed resources led to a limited population, the economy was stagnant until the 1800's. More people more resources used less resource/person less people. Population and per capita income become stagnant. b. What is the Harrod-Domar model? Why did the concept of the “financing gap” fail to guide developing economies properly? HD model explained growth rates through savings and capital accumulation. It says that there is a link between investment and growth and that if you have a target, there is a required investment to get to that target for the output you're looking for in the end, which is called the 'financing gap'. It failed because theres no stable link between investment and growth. According to the Harrod-Domar growth model, the growth rate of an economy is depended on two factors - the savings ratio and the savings level and capital-output ratio of the economy. ** g - s / k
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ECN115B Final Study Guide - Study Sheet for the Final Exam...

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