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Assume India and Australia have the same saving rate (and ignore the effects of international investment), If India's capital stock is 100 units per labour
Assume India and Australia have the same saving rate (and ignore the effects of international investment), If India's capital stock is 100 units per labour and Australia's capital stock is 200 units per labour, which of the following predictions would the neoclassical growth model make? India and Australia's growth rate should be the same because they have the same saving rate and therefore are investing in new capital at the same rate. India's growth rate should be higher than Australia's, and over time India's GDP per capita should converge to Australia's rate compared to Australia because economic growth requires population growth. We cannot predict anything about India's growth India's growth rate will continue to be lower than Australia's because India has a smaller capital stock economic growth largely depends on technology growth We cannot predict anything about India's growth rate compared to Australia because
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