JNU 2006-07

[abhinav619]

1.)
A nation invests all it saves and its rate of saving is 30 per cent. if the annual rate of growth of that country is 6 per cent, then its production conditions must be such that it delivers a unit increment in output for every
( a) 2 units of investment
(b)10 units of investment
(c) 3 units of investment
(d) 5 units of investment

2.)
Consider a closed controlled economy with unlimited supplies of labour in which the incremental capital-output is 4 and the rate of population growth is 1.5% per annum. If the economy wants to allain a growth rate of per capita of 6% per annum, what must be the savings rate in the economy?

(a) 24
(b) 27.5
(c) 30
(d) 36

[Ashima]

1 d (they are just asking the "theta" of the Harrod -domar equation)
2 c

[abhinav619]

Could you explain the second one please??

[Ashima]

Use the harrod domar eqn:

s/4= .015+.06

s= 30 percent :)

[Anjali]

But Ashima , here the growth rate is not per capita I suppose . And in harrod domar we use only per capita growth . Please correct me where Iam wrong

[Anjali]

 Second it's surely C

[Homer Simpson]

we use the capital output ratio in harrod domar

[Anjali]

But Tsuki growth rate is per capita there in harod domar .
Like in the other question of abhinav , per capita is mentioned .

[Anakin Skywalker]

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