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Imagine an Economy with Production Function Y = F(K)= and 400

Question 63

Multiple Choice

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


A) 16 units
B) 64 units
C) 100 units
D) 256 units

Correct Answer:

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