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1) Why does a temporary change in technology result an in increase in Investment in a closed economy ?

1)     Why does a temporary change in technology result an in increase in Investment in a closed economy ?

 

2)     Net real capital income = (R/P) ● κK - δ(κ) ● κK

Where κ = capital utilization rate

Assume

R/P = 12

K = 1

L = 4

δ (κ) = 10κ2

WHAT is the optimal utilization rate of capital?

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