Let the Real Rate of Interest Equal 5 Percent, Set

question 41

Multiple Choice

Let the real rate of interest equal 5 percent, set the rate of depreciation equal to 10 percent, and normalize the price of a piece of capital at $10,000. In this case, the rental price of capital would equal

• A) $500.
• B) $1,000.
• C) $1,500.
• D) $10,000.
• E) $666.67.

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Definitions:

Market System

This economic structure allows for the determination of investment, production, and distribution through the interplay of supply and demand, ensuring that the pricing of goods and services occurs in an open price system.

Distribution Of Goods

The process of making products available to consumers by transporting and storing them from the point of production to the point of sale.