1. Following are data on Country A's (i) Gross Domestic Savings as a % of GDP and (ii) Annual Growth Rate of GDP (in %). Series 2001 2002 2003 2004 2005 Gross Domestic Savings (% of GDP) 31 28 32 29 29 GDP Growth (annual %) 5 5 6 (a) Calculate v, the estimated capital:output ratio for 2001 using the savings rate, s, and growth rate, g, using data for 2001. Assume that d, (the rate of depreciation of existing capital) is 5% and constant over all the years. (b) Using this estimated ratio and the savings data for each of the following years: 2002 to 2005, calculate the predicted growth rate of GDP for each year from 2002 to 2005. Keep assuming that d = 5%. How well do your predicted growth rates match the actual growth rates? (c) Now calculate v = the estimated capital: output ratio for each of the years 2002 to 2004. Then using the estimated value of v for 2002, and savings data for 2003, calculate the predicted growth rate of GDP for 2003; then using the estimated value of v for 2003, and savings data for 2004 calculate the predicted growth rate for 2004 and so on. (d) Do your predicted growth rates match the actual growth rates better? (e) What do your results from parts (b) and (d) say about the long-run forecasting power of the Harrod-Domar model? 2.Suppose that the intensive form of the neoclassical production function is given by the formula