Assumptions of Domar Model:
1. There is an initial full employment level of income that has already been achieved.
2. Absence of government interference and foreign aids.
3. The marginal and average propensities to save are equal.
4. There are no lags in adjustment.
5. The propensity to save and capital co-efficient are considered constant.
6. Depreciation is measured to the cost of replacement of depreciated asset by another one of the same productive capacity.
7. The economic system is closed.
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