Neco 2018 Economics Question 45

Practice objective / multiple choice question 45 from the 2018 Neco Economics examination.

Neco 2018 Economics Objective / Multiple Choice Hard Difficulty
Question 45 NECO • 2018 • ECONOMICS • objective

Using the Harrod‑Domar model, a country has a capital‑output ratio \(k = 3\) and a national savings rate \(s = 20\%\). The government aims for an annual economic growth rate of \(5\%\). (a) Verify whether the target growth rate is attainable with the given savings rate. (b) If the current GDP is \(2{,}000\) billion naira, calculate the amount of net investment required to achieve the target growth in the next year. (c) Estimate the number of years needed for the economy to double its output at the target growth rate (use the rule of 70).

Answer Options

A. Target is attainable; required net investment = 300 billion naira (current investment 400 billion is sufficient); economy will double in about 12 years
Correct Answer B. Target is attainable; required net investment = 300 billion naira (current investment 400 billion is sufficient); economy will double in about 14 years
C. Target is attainable; required net investment = 250 billion naira (current investment 400 billion is sufficient); economy will double in about 14 years
D. Target is not attainable; required net investment = 300 billion naira (current investment 400 billion is insufficient); economy will double in about 14 years
Correct Answer
B
Correct Option:
Target is attainable; required net investment = 300 billion naira (current investment 400 billion is sufficient); economy will double in about 14 years

About This Question

This is Neco 2018 Economics Question 45. It is one of the objective questions from the 2018 Neco Economics examination.

Difficulty level: Hard .

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