1. If the marginal propensity to consume (MPC) in the Keynesian model increases (b in our equation = + ), what happens to the savings rate? What does this say about countries that save a large proportion of income relative to those that save less in terms of the Harrod - Domar model?
2. The Harrod - Domar growth model is based on the fundamental Keynesian relationship between consumption and income. How does this relationship fit into the Harrod - Domar model?
3. Suppose the efficiency of the economy improves in the sense that more output is generated with the same capital stock. What will this do to the growth rate in the Harrod - Domar growth model?
4. What are the variables that the Solow and the Harrod - Domar models share in common?
5. What does the population growth adjustment to the Harrod - Domar model do to the growth path of income?