Problem
The Democratic Republic of the Congo's current GDP is close to 35 billion USD. Suppose the gross national savings rate is 10%, the capital-output ratio is 5, and the rate of depreciation is 1%.
a) The DRC's target GDP have years from now is 45 billion USD. What is the growth rate needed to achieve this (calculate the numerical target), if growth occurs according to the Harrod-Domar model?
b) The DRC plans to achieve the targeted growth rate, calculated in part(a) by increasing savings. What is the necessary savings rate?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.