Gce Model Questions Vol1 2025 Economics Question 41
Practice objective / multiple choice question 41 from the 2025 Gce Model Questions Vol1 Economics examination.
A developing country has a current capital stock of ₦500 bn and a labour force of 50 million. Its aggregate production function is \(Y = A K^{\alpha} L^{1-\alpha}\) with \(A = 2\) and \(\alpha = 0.4\). The labour force grows at 2 % per year and the depreciation rate of capital is 5 % per year. The government wants real GDP per‑capita to rise by 5 % per year for the next three years, with technology and the production‑function parameters remaining unchanged. Assuming the required net investment is the same each year, what constant percentage of GDP must be devoted to net investment (rounded to one decimal place) to achieve the target?
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This is Gce Model Questions Vol1 2025 Economics Question 41. It is one of the objective questions from the 2025 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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