Economics · Macroeconomics
In the Harrod-Domar growth model, the knife-edge equilibrium problem arises because stable growth requires equality between warranted and actual growth rates. Which parameters must remain constant in the basic formulation? (i) Population growth rate (ii) Output level (iii) Propensity to save (iv) Capital-output ratio Choose the correct option:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1(i), (iii) and (iv)✓
- 2(i), (ii) and (iii)
- 3(i) and (ii) only
- 4Only (iv)
Correct answer
(i), (iii) and (iv)
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