Determine what will be the initial gdp growth rate

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Reference no: EM13203448

Consider the Harrod-Domar model. Suppose that initially, an African country's capital-output ratio (k) is 5, and the savings rate (s) is 12%.

a). What will be the initial GDP growth rate?

b). Suppose that technological advances cause the capital-output ratio to fall to 4. How will this affect the GDP growth rate?

c). Starting again from the initial situation, suppose instead that the national savings rate is increased to 15%. How will this affect the GDP growth rate?

Reference no: EM13203448

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