Output Y in an economy depends on the inputs of physical capital K, labor N and available technology A, according to the production function: Y= ACKN'; where a+B+1. Firms maximize profits and they calculate the optimal stock of capital and investment by comparing the marginal product of capital with the user cost of capital. Firm close the gap between the actual and desired stock of capital within one period. The capital stock at the end of the previous period was equal to Ko. In the current period firms expect that A=A1 and N=1. The parameters of the production function are given by oFy=1/4, B=%2. The nominal interest rate equals in, the depreciation rate equals d. The price of capital equipment is equal to P, and it is expected to fall in the next period to P2. The general price level is P. Calculate the desired stock of capital, net and gross investment level in the current period (period 1). Output Y in an economy depends on the inputs of physical capital K, labor N and available technology A, according to the production function: Y= ACKN'; where a+B+1. Firms maximize profits and they calculate the optimal stock of capital and investment by comparing the marginal product of capital with the user cost of capital. Firm close the gap between the actual and desired stock of capital within one period. The capital stock at the end of the previous period was equal to Ko. In the current period firms expect that A=A1 and N=1. The parameters of the production function are given by oFy=1/4, B=%2. The nominal interest rate equals in, the depreciation rate equals d. The price of capital equipment is equal to P, and it is expected to fall in the next period to P2. The general price level is P. Calculate the desired stock of capital, net and gross investment level in the current period (period 1)