Gce Model Questions Vol1 2023 Economics Question 15
Practice objective / multiple choice question 15 from the 2023 Gce Model Questions Vol1 Economics examination.
Country X has a capital‑output ratio \(K/Y = 3\) and a depreciation rate \(\delta = 5\%\) per year. Its current saving rate is 15 % of GDP. Using the Harrod‑Domar model, the required saving rate \(s\) to achieve a target real GDP per‑capita growth rate \(g\) satisfies \(g = s/(K/Y) - \delta\).\n(a) If the government wishes to raise the real GDP per‑capita growth rate to 4 % per year, calculate the required saving (investment) rate.\n(b) How many additional percentage points of the saving rate are needed beyond the current 15 %?\n(c) Briefly suggest two policy measures that could help the economy achieve the higher saving rate.
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This is Gce Model Questions Vol1 2023 Economics Question 15. It is one of the objective questions from the 2023 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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