Question: Suppose z' and K increase at the same time. Show that it is possible for the real interest rate to remain constant as a result.

  1. Suppose z' and K increase at the same time. Show that it is possible for the real interest rate to remain constant as a result. What does this say about the model's ability to explain the differences between poor and rich countries and to explain what happens as a country's economy grows?

Please provide the answer with an explaination.

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