In the setting of the previous (endogenous labour-growth) question, an increase in the parameter
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2 marks, −0.666666666666667Economics of Growth and DevelopmentHarrod–Domar and Solow growth modelsGrowth models with labour markets and class savingsHardabout 4 min
DSE 2015 Question 59: Harrod–Domar and Solow growth models
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Plain-text version
In the setting of the previous (endogenous labour-growth) question, an increase in the parameter A (A) unambiguously increases the long-run steady-state capital-labour ratio (B) unambiguously decreases it (C) decreases the long-run steady-state capital-labour ratio only when initial k₀<k̄ (D) leaves it unchanged
Harrod–Domar and Solow growth models has come up 113 times in 7 exams since 2006.
What this question tests
This question is on Growth models with labour markets and class savings, part of Harrod–Domar and Solow growth models in Economics of Growth and Development.
Extensions that add a labour market or let different groups save at different rates.
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