Suppose that in a particular economy, the poor earn ₹ 500 per year and spend it all on consumption, the middle class earn ₹ 2,000 per year and spend ₹ 1,500 on consumption and the rich earn ₹ 10,000 per year and consume 80% of it. The overall savings rate in the country, if 20% people are the poor and 50% are in the middle class, is
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Harrod–Domar and Solow growth models has come up 113 times in 7 exams since 2006.
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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Question from the JNU SIS 2015 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.