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Suppose that there is an economy that is represented with the production function Y=4 sqrt K , . has an investment rate of 10 %,
Suppose that there is an economy that is represented with the production function Y=4 sqrt K , . has an investment rate of 10 %, and a depreciation rate of 5 %. Assume that there are no increases in labor , education or technology . If the capital stock is currently at 25, is the economy above , below , or at the steady state ? What does this imply about growth in this economy ?
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