Waec Model Questions Vol1 2018 Economics Question 44

Practice objective / multiple choice question 44 from the 2018 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2018 Economics Objective / Multiple Choice Hard Difficulty
Question 44 WAEC_MODEL_QUESTIONS_VOL1 • 2018 • ECONOMICS • objective

In a low‑income country the capital‑output ratio (k) is 3 and the national savings rate (s) is 20 % of GDP. Using the Harrod‑Domar model (g = s/k):\n(a) What is the maximum sustainable annual economic growth rate that can be attained with the current savings rate?\n(b) What savings rate would be required to achieve an annual growth rate of 7 %?\n(c) By how many percentage points must the current savings rate be increased to reach this target?\n(d) Mention two non‑monetary factors that could impede the realization of the desired growth.

Answer Options

A. a) 6.0 % per year; b) 20 % savings rate; c) increase by 0 pp; d) e.g., limited access to credit and environmental constraints.
B. a) 7.5 % per year; b) 24 % savings rate; c) increase by 4 pp; d) e.g., low education levels and corruption.
Correct Answer C. a) 6.67 % per year; b) 21 % savings rate; c) increase by 1 pp; d) e.g., lack of skilled labour and political instability.
D. a) 5.0 % per year; b) 18 % savings rate; c) increase by 2 pp; d) e.g., inadequate infrastructure and weak institutions.
Correct Answer
C
Correct Option:
a) 6.67 % per year; b) 21 % savings rate; c) increase by 1 pp; d) e.g., lack of skilled labour and political instability.

About This Question

This is Waec Model Questions Vol1 2018 Economics Question 44. It is one of the objective questions from the 2018 Waec Model Questions Vol1 Economics examination.

Difficulty level: Hard .

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