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Consider a Small Country with a Capital Stock Equal to 900

Question 253

Multiple Choice

Consider a small country with a capital stock equal to 900 units. This year it produced 20 units of new capital goods, with a depreciation rate of 20% and a production function of Y = K1/2. What will its capital stock be next year?


A) 920 units
B) 720 units
C) 740 units
D) 900 units

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