Let’s think about two countries, Frugal and Smart. In Frugal, people devote 50% of GDP to making new investment goods, so ?=0.5, and their production function is ?=?‾‾√. In Smart, people devote 25% of GDP to making new investment goods, so ?=0.25 and their production function is ?=2?‾‾√. Both countries start off with ?=100. a. What is the amount of investment in each country this year? Frugal:     Smart:

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