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Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States. a.What would be the direction of foreign direct investment

Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States.

a.What would be the direction of foreign direct investment (FDI)?

b.Use a world-capital-market graph to show the effects of FDI on the two countries' rental rates of capital, GDP, and return to labor owners.

c.Identify the net change in world output in the graph that you have drawn from part b.

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