What are harrod-domar assumptions, Business Economics

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What are Harrod-Domar assumptions?

The H-D (Harrod-Domar) model assumes as:

• Fixed capital output ratio. Nonetheless, diminishing marginal returns to capital element exist therefore each successive unit of investment is less productive and the capital to output ratio increases.

• Fixed savings ratio

• A closed economy. Within open economy, extra incomes may be utilized to buy imports as well as not saved.

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