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The production function of an economy is given by: =[2] where is capital, is output, and is total factor productivity. Derive an algebraic expression for

The production function of an economy is given by:

=[2] where is capital, is output, and is total factor productivity.

Derive an algebraic expression for the next period's desired level of capital. Assume that capital depreciates at rate , the interest rate is , the price of capital goods is , and the effective tax rate is .

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