In an economy the interest rate is 5% and the depreciation rate is 20%. The price of capital is 1. A firm has the following production function Y=AKO.5N0.5 Find the marginal cost of capital Compute the investment desired by the firm, knowing that A=2, K=8, N=1. If the economy is a close economy, what is the amount of national savings? Instead, what if this was an open economy? Explain.

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