macro 2007 jnu

[priyanka p]

QUES   Consider a closed controlled economy with unlimited supplies of labor in which the incremental capital output ratio is 4 and the rate of population growth is 1.5% per annum. if the economy wants to attain a growth rate of per capita income of 6% per annum, what must be the savings rate in percent in the economy?         OPTIONS (A) 24  (B)   27.5       (C)30   (D) 36

[Amit Goyal]

Consider a closed controlled economy with unlimited supplies of labor in which the incremental capital output ratio is 4 and the rate of population growth is 1.5% per annum. if the economy wants to attain a growth rate of per capita income of 6% per annum, what must be the savings rate in percent in the economy? OPTIONS (A) 24 (B) 27.5 (C)30 (D) 36 Incremental capital output ratio(ICOR) = dK/dY = 4 Population growth rate = dN/N = 0.015 Growth rate of per capita income = dY/Y - dN/N = 0.06 Growth rate of income = dY/Y = 0.075 Now in equilibrium Savings becomes Capital, so saving rate = S/Y= dK/Y Using ICOR above, (dK/Y)/(dY/Y) = 4 dK/Y = 4dY/Y = 0.3 i.e. 30%

[priyanka p]

thank you sir

[ritu]

why cant we use harrod domar equation here...??????by that answer is coming out to be 0.36!!!

[ritu]

sir pls reply on ths post:)

[ritu]

if govt purchases in a simple keynsian model are used for celebrating birthdays of public servants & not for creating infrastructure then will equilibrium income increase coz of increase in govt purchases?

[ritu]

current a/c bop deficit of an open economy=
imports of goods & services-exports of goods and services-net remittances out of factor income received from abroad......can it be true??????????