The relationship between investment as a proportion of national income (i) and the potential rate of economic growth (gp) is given by the formula: gp = i x MEC (where MEC = marginal efficiency of capital).

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The formula gp = i x MEC represents the relationship between investment as a proportion of national income and the potential rate of economic growth, where MEC stands for the marginal efficiency of capital. This formula suggests that the potential growth rate (gp) is directly proportional to the level of investment (i) and the efficiency with which that investment is used in the economy (MEC).

The Relationship Between Investment as a Proportion of National Income