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Question 6

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?

A

2.02.02.0 percentage points

B

4.54.54.5 percentage points

C

9.09.09.0 percentage points

D

18.018.018.0 percentage points

Markscheme

Development Questions

  1. A Level
  2. /Economics
  3. /Development

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.

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