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Suppose that the equation K* = (0.3Y)/rc determines Sri Lanka’s desired capital stock. K* is the...

Suppose that the equation K* = (0.3Y)/rc determines Sri Lanka’s desired capital stock. K* is the desired capital stock, Y is the country’s GDP, and rc is the rental cost of capital. D. Explain why the adjustment to the new level of desired capital stock is spread over a number of years.

D. Explain why the adjustment to the new level of desired capital stock is spread over a number of years.

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