Question

In a harrodian economy, icor is 4.5 : 1, population growth is 2% per annum, and the investment rate is 27%. Hence the annual growth of per capita will be

Answer 1

Growth Rate  = Investment rate /ICOR

                     = s/v

 =27 % / 4.5

 =6 %

Answer 2

Annual Growth Rate = 4%

Explanation:

Given

ICOR= 4.5:1, Population growth = 2%,

Investment Rate= 27%,

Annual Growth =$\frac{Investment Rate}{ICOR}$

                          =$\frac{27}{4.5}$

                          = 6%

Now,6%-2%=4%

Annual Growth Rate = 4%