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Examine the consequences for a hypothetical developing economy if the rate of borrowing to fund a fiscal deficit is growing annually at a faster rate than the
GDP = R1000
Fiscal Deficit = R1200
GDP is used to settle / pay for fiscal deficits.
Therefore R1000 - R1200 = R200. This implies that the deficit keeps on growing.
Remember the GDP equation and the impact of imports and exports.
Step by step
Solved in 3 steps with 2 images
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- What are some of the ways that an LDC can increase its rate of returns to investment in secondary and higher educationinformation regarding Country AAA: Output per capita: y = 3k0.5Depreciation rate: d = 0.10Growth rate of population: n = 0.05Savings function: S = 0.3Y Calculate the capita labor ration (k) and output per capita at the steady-state equilibrium. Say the savings rate in Country AAA has increased to 0.5. Everything else remains the same. Repeat question a) above. Say the population rate has increased to 0.08. Everything else remains the same. Repeat question a) above. hat conclusion can you infer from the answers to question b) and c) above?Calculate the steady state level of investment in an economy with a savings rate of 15%, population growth of -1%, depreciation of 10%, and a= 2/3