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Questions › IIT JAM › IIT JAM 2026 › Q57
2 marksEconomics of Growth and Development › Harrod–Domar and Solow growth models › The Harrod-Domar modelHardabout 3 min

IIT JAM 2026 Question 57: Harrod–Domar and Solow growth models

For a closed economy: St=aYtS_t=aY_tSt​=aYt​ and It=g(Yt−Yt−1)I_t=g(Y_t-Y_{t-1})It​=g(Yt​−Yt−1​), where StS_tSt​, YtY_tYt​ and ItI_tIt​ are savings, income and investment in period ttt, and aaa and ggg are positive constants. For Y0=100Y_0=100Y0​=100, a=0.5a=0.5a=0.5 and g=0.6g=0.6g=0.6, the value of Y2Y_2Y2​ is ________ (in integer).

Answer and worked solution

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Plain-text version

For a closed economy: Sₜ=aYₜ and Iₜ=g(Yₜ-Yₜ₋₁), where Sₜ, Yₜ and Iₜ are savings, income and investment in period t, and a and g are positive constants. For Y₀=100, a=0.5 and g=0.6, the value of Y₂ is (*in integer*).

Also written as: For a closed economy: S_t=aY_t and I_t=g(Y_t-Y_(t-1)), where S_t, Y_t and I_t are savings, income and investment in period t, and a and g are positive constants. For Y_0=100, a=0.5 and g=0.6, the value of Y_2 is (*in integer*).

Harrod–Domar and Solow growth models has come up 113 times in 7 exams since 2006.

What this question tests

This question is on The Harrod-Domar model, part of Harrod–Domar and Solow growth models in Economics of Growth and Development.

Growth driven by saving and the capital-output ratio, and why it is knife-edge.

TestStop has 27 past-paper questions on this subtopic.

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