The Opportunity Cost of Capital Is

question 398

Multiple Choice

The opportunity cost of capital is

• A) the rate of return realized on an investment.
• B) the rate of return that could be earned by the owner's capital were it used elsewhere.
• C) the rate used to calculate a firm's tax liability.
• D) the rate of interest the government uses to calculate legal business tax penalties.

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Definitions:

Aggregate Income

The total income earned by all individuals in an economy from all sources, including wages, rental income, and investment income, during a given time period.

Aggregate Consumption

The total amount of goods and services consumed in an economy over a specific time period.

Consumption Function

A formula in economics that depicts the correlation between overall consumption and the gross national income.

Aggregate Income

The total sum of income earned by individuals and businesses in an economy over a specified period.