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

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