A Machine Cost $15,000 to Install,and Has a Resale Value

question 35

Multiple Choice

A machine cost $15,000 to install,and has a resale value one year later of $12,000.If the real interest rate is 10%,then the user cost of capital is ________.

• A)$4,500
• B)$1,500
• C)$3,000
• D)$1,200

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Definitions:

Real GDP

The measure of a country's economic output (Gross Domestic Product) adjusted for price changes, such as inflation or deflation, to reflect the real value of goods and services produced.

National Debt

The cumulative sum of funds borrowed by a nation's government.

MPC

Marginal Propensity to Consume; the proportion of additional income that a consumer spends on goods and services rather than saving it.

Multiplier

In economics, a factor by which an initial change in spending is magnified or multiplied in the overall economy.