5. The US has pledged to give $1 billion to Haiti for the next 12 months. The per capita income of Haiti is about$1000 and its population is 10 million and growing by 2% per year. Haiti has a capital-output ratio of 5, a savingsrate of 10%, and a depreciation rate of 1%.Using the Harrod-Domar model, calculate the following:[a.] how will this infusion of cash change the rate of growth of its GDP and GDP per capita?[b.] how much will it add to per capita income next year?[c.] If this aid were in the form of free food, how would its impact be different?

Let capital be ' K' , Population be 'P' , Saving rate is 's' Per - capita income in year (t)=…

Answered: 5. The US has pledged to give $1…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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