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Imagine an Economy with Production Function Y = F(K) = K\sqrt { K }

question 12

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Imagine an economy with production function Y = F(K) = K\sqrt { K } and 400 units of capital. If the fraction of output invested in new capital increases from γ\gamma = 0.2 to γ\gamma = 0.5 and the depreciation rate is δ\delta = .05, what is the new steady-state amount of capital?


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