Suppose the growth of production in Country A follows Harrod-Domar Model. Country A has 100 people(labors)...

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Suppose the growth of production in Country A follows Harrod-Domar Model. Country A has 100 people(labors)...

Suppose the growth of production in Country A follows Harrod-Domar Model. Country A has 100 people(labors) in Year 1. The capital K in Year 1 is 60. The incremental capital-output ratio v = 5 and the constant savings rate s = 0.1. For Country A, what is the production per capita in Year 1?

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Answer 1

Answer #1

Capital output ratio (v) = 5

Capital (K) / Output (Y) = 5

60 / Output (Y) = 5 (Note: Capital K in year 1 is 60)

Output (Y) = 60/5

Output (Y) = 12 (Production Y in year 1)

Country A has 100 people (labor) in year 1

Labor (L) = 100

Production per capita in Year 1 = Output (Y) / Labor (L)

Production per capita in Year 1 = 12 / 100

Production per cpaita in Year 1 = 0.12

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Answer 2

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Suppose the growth of production in Country A follows Harrod-Domar Model. Country A has 100 people(labors)...

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