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5. A small less developed country nds itself the recipient of a large amount of foreign direct investment that adds 50% to its current steady-state

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5. A small less developed country nds itself the recipient of a large amount of foreign direct investment that adds 50% to its current steady-state level of capital stock. This country seeks your advice about the long-term implications of that kind of help. a. Assume this country begins in a steady-state condition at Y = K955, and show the short-run effects of a 50% increase in the steady-state level of capital stock such that K = 1.5K}; on the Solow diagram

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