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Practice Question I need help with The total amount of capital in the world is valued at $100 billion; the U.S. has $30 billion and

Practice Question I need help with

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The total amount of capital in the world is valued at $100 billion; the U.S. has $30 billion and the Rest of the World (ROW) has $70 billion. Currently, there is no international capital mobility between the U.S. and the Row. The marginal product of capital schedules are identical in the U.S. and Row. expressed as: MPKi = 25 0.20Ki where Ki is the value of capital in billions of dollars for location i (U.S. or RoW). The situation is depicted in the diagram below, and K0 is the initial capital allocation. rus. K0 rRoW 25 25 M PKROW 0 30 100 Value of Capital (billions of dollars) Focus on the U.S. In autarky, what is total output in the U.S.? If the U.S. and the Row open their economies to international borrowing and lending, how much does the U.S. borrow or lend? Once international borrowing or lending takes place, what is total output in the U.S.? How much is the U.S. better off or worse off by the international borrowing or lending

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