Gce Model Questions Vol1 2022 Economics Question 9
Practice objective / multiple choice question 9 from the 2022 Gce Model Questions Vol1 Economics examination.
According to the Harrod‑Domar model, the annual growth rate of output \( g \) is given by \( g = s/k \), where \( s \) is the savings rate (as a proportion of GDP) and \( k \) is the capital‑output ratio. A developing country aims for a growth rate of 5 % per year and currently saves 20 % of GDP. The government plans to raise the savings rate to 25 % and, through efficiency reforms, reduce the capital‑output ratio by 10 %. Assuming the initial capital‑output ratio is consistent with the current target, what is the new expected growth rate (as a percentage, to one decimal place)?
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This is Gce Model Questions Vol1 2022 Economics Question 9. It is one of the objective questions from the 2022 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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