Neco Model Questions Vol1 2018 Economics Question 19
Practice objective / multiple choice question 19 from the 2018 Neco Model Questions Vol1 Economics examination.
Country A has a current real GDP of \(\text{₦}5\) trillion and a population of 50 million growing at 2% per year. Real GDP is growing at 5% per year. The capital‑output ratio (K/Y) is 3. Using the Harrod‑Domar model where the growth rate \(g = s/k\) (\(s\) = savings rate, \(k\) = K/Y),\n(a) calculate the minimum savings rate required to sustain the 5% GDP growth,\n(b) determine the amount of net investment (in trillion naira) needed each year,\n(c) if the government raises the savings rate by 1 percentage point, what will be the new GDP growth rate (assume K/Y unchanged)?
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About This Question
This is Neco Model Questions Vol1 2018 Economics Question 19. It is one of the objective questions from the 2018 Neco Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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