In a developing economy, the incremental capital-output ratio (ICOR) is constant at 4.5. The government aims to increase the annual rate of economic growth from 2.0% to 4.0% using the Harrod-Domar growth model. Assuming no foreign aid or capital inflows, by how many percentage points must the domestic savings ratio increase to achieve this target?
2.02.02.0 percentage points
4.54.54.5 percentage points
9.09.09.0 percentage points
18.018.018.0 percentage points
29 exam-style questions on OCR A Level Economics Development. Each one has a worked solution and a mark scheme showing where the marks go.