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    Question

    The Harrod-Domar growth model is based on the

    relationship of what two economic elements?
    A Raw materials and technology Correct Answer Incorrect Answer
    B Technology and consumption Correct Answer Incorrect Answer
    C Educational enrollment and number of teachers Correct Answer Incorrect Answer
    D Saving and Investment Correct Answer Incorrect Answer

    Solution

    The Harrod Domar Model suggests that the rate of economic growth depends on two things: i. Level of Savings (higher savings enable higher investment) ii. Capital-Output Ratio . A lower capital-output ratio means investment is more efficient and the growth rate will be higher.

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