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What is the capital-output ratio?
Capital-output ratio:
This ratio (k) is the amount of capital required to produce £1 of Gross Domestic Product generated, every year.
• When £6 worth of capital equipment makes all £1 of yearly output in that case the capital-output ratio is six to one.
• A three to 1 ratio shows that simply £3 of capital is needed to produce every £1 of output, every year.
The Harrod-Domar model plays the key role through the productivity of investment that is an economy capital-output ratio (k). The additional productive producer goods which, the lower the capital output ratio that the advanced the economic growth.
What are the external constraints on government action less developed countries? External Constraints on Government Action LDCs face external factors beyond their control are:
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