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The Harrod-Domar Growth Model

Question 55

Multiple Choice

The Harrod-Domar growth model


A) expresses the growth rate of GDP as a function of the proportion of GDP saved, divided by the capital-output ratio.
B) indicates that full-employment GDP will grow faster as the capital-output ratio in the economy rises.
C) requires the capital-output ratio to grow if the economy is to increase to its full-employment GDP.
D) expresses the rate of growth of GDP as an inverse function of the savings rate.
E) indicates that full-employment GDP will grow only if the savings rate declines while the capital-output ratio increases.

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