Kerala KAS 2020 · Question 9 of 70

The knife-edge problem in the Harrod-Domar growth model implies a constant: (i) Rate of population growth (ii) Output (iii) Rate of saving (iv) Capital-output ratio.

Economics - Growth Models

A(iv) alone is correctCorrect
B(i) and (ii) are correct
C(i), (ii) and (iii) are correct
D(i), (iii) and (iv) are correct

Answer: A. (iv) alone is correct

Explanation

The Harrod-Domar knife-edge (instability) problem arises from the assumption of constant capital-output ratio along with constant saving rate and population growth.

Source: Kerala PSC KAS Officer 016/2020 official paper (22-Feb-2020), official FINAL answer key (booklet A)

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