Significance and Objectives | Relationships | Criticisms |
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What is the Solow-Swan model
The Harrod-Domar model was a precursor to this economic growth model.
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What is an increased level in savings
One way to increase the rate of growth in an economy is by reducing the capital-output ratio. ___ is the other way.
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What is lack of a sound financial system
Increased saving by households does not necessarily mean there will be greater funds available for firms to borrow to invest due to this...
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What is the capital-output ratio, c
Quite simply, the model suggests that the economy's growth rate depends on the level of national saving and this variable.
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What are savings and national income
OR What are changes between capital stock and capital investment
These are one of the two relationships to economic growth.
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What is market failure
Research and development needed to improve the capital/output ratio is often under-funded can cause this.
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What are business cycles
The model was originally developed to analyze ___ before being adapted to economic growth.
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What is a linear-staged growth model
Because of the simple relations between the variables, the Harrod-Domar model is considered this type of growth model.
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What are weaknesses in human capital
Efficiency gains that reduce the capital/output ratio are difficult to achieve in developing countries due to ___.
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What is GDP
When capital-output ratio, c, is higher, the growth rate of ___ lowers.
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What is China
In Developing Asia and Latin America, one country was a clear outlier in terms of economic growth and investment.
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What is foreign aid
Attempts to fill the savings gap causes external debt repayment issues.
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What is Keynesian economics
The Harrod-Domar model is influence by this classic school of economic thought.
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What is a high c value
In the Harrod-Domar model, this would indicate inefficient investment.
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What is a low marginal propensity to save
The disposable income gained is often used on increased consumption rather than saved.
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