Print, reference this, published: 23rd March, 2015, today in the present world foreign currency is a key component or tool for different kinds of businesses, and many countries in the world did businesses in foreign currencies like in Dollars, Euros etc. Solow showed that the growth process is stable. His model considers a single aggregated output which can be used either for consumption or capital formation. The Harrod- Domar model is based on the simple fixed-coefficient production function of the Leontief type. Retrieved February 10, 2010, from Encyclopedia. The Aggregate Production Function : Aggregate production function describes the relationship of the size of an economys labour force and its capital stock with the level of that countrys GNP. (1) can be converted into another equation to relate changes in output to changes in the capital stock Y K/v The growth rate of output, g, is simply the increment in output divided by total output. He objected to the neo-classical assumption of ready substitution between capital and labour due to the rigidity of the technology already embodied in existing machines. The straight line in Fig. In contrast, all technical change in the neo-classical model is disembodied in the sense that it proceeds as time marches on with or without supporting investment.
Saving per worker, and thus actual investment, exceeds the amount needed to keep capital per worker constant. When any one or any combination of them grows, the output will increase as well.
Secondly, the relation between the aggregate demand and stock markets may be used to forecast the direction of the exchange rate. In particular, he looked at electricity market research papers pdf the relationship between labour force growth, capital growth and technological growth and examined whether the growth process has any inherent tendencies to slow down. Literature review, in the following section, there are some studies associated to this area of study that has been investigated earlier by other researchers. No technical progress can occur without accompanying investment. With economic growth the saving rate rises, and so the rate of interest or the price of financial capital falls while employment and wage rise. The three major macroeconomic variables incorporated in the investigation was effective exchange rate, the foreign exchange reserves and the balance of trade. If the economy starts at the steady state, it will stay there. Why does Pakistan have to accumulate foreign reserves?