Final answer:
Rostow's model indicates a low savings rate and high capital output ratio during the pre-condition of take-off period, due to low income and inefficiencies, combined with a low elasticity of savings in the short run.
Step-by-step explanation:
According to Rostow, the savings rate and capital output ratio is low during the pre-condition of take-off period. This is primarily because the pre-condition stage is characterized by poor infrastructure and limited technological advancement, leading to low levels of productivity and income, which in turn results in low savings rates. Additionally, during the pre-condition of take-off, the capital output ratio is typically high, indicating that a significant amount of capital is required to generate additional output because the economies at this stage are not very efficient. For instance, if the supply curve for financial capital is highly inelastic, incentivizing savings through tax breaks or interest increases would lead to only a minor increase in savings, as the elasticity of savings with respect to the interest rate is quite low in the short run. Therefore, structural changes are necessary to increase the savings rate and improve the capital output ratio during the pre-condition of take-off stage.