Reference no: EM133235630
1. Lewis's model of coexistence of modern and traditional methods of production is an example of
a. False-paradigm model
b. Dualism
c. Free-market analysis
d. Linear-stages theory
2. The Harrod-Domar growth model suggests that growth is
a. directly related to saving and the capital/output ratio
b. directly related to saving and inversely related to the capital/output ratio
c. directly related to the capital/out ratio and inversely related to savings
d. indirectly related to savings and the capital/output ratio.
3. Consider a closed economy. Suppose the capital-output ratio is 5 and the saving rate is 30%. If the target is to increase its annual growth rate by 1%, use the Harrod-Domar growth equation to determine how such a target can be achieved?
a. Lower its capital-output ratio from 5 to 3.33
b. Increase its saving rate by 15%
c. Increase the labor supply to produce more goods and services
d. Encourage high consumption as it will stimulate production process.