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Suppose the economy starts out in steady state until, suddenly, the depreciation rate declines from to < forever. (a) What happens to capital, output, and
Suppose the economy starts out in steady state until, suddenly, the depreciation rate declines from to < forever. (a) What happens to capital, output, and consumption in the new steady state? Explain your reasoning using a phase diagram. (b) Illustrate the transition dynamics of capital to the new steady state in a graph and explain
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Microeconomics Theory and Applications
Authors: Edgar K. Browning, Mark A. Zupan
12th edition
9781118920060, 1118758870, 1118920066, 978-1118758878
