A Machine Is Purchased for $70,000

question 72

Multiple Choice

A machine is purchased for $70,000. The transportation costs were $4,000, installation costs were $1,000 and taxes on the purchase price were $700. The cost basis of the machine is:

• A) $70,000.
• B) $74,000.
• C) $75,700.
• D) none of the above.

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Definitions:

Inflationary Expectations

The beliefs that consumers, businesses, and investors have about future inflation rates, which can influence economic behavior and policy decisions.

Discretionary Policy

Involves government policies that are implemented through ad-hoc decisions by policymakers, rather than set by predetermined rules.

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

Rational Expectations School

A theory proposing that individuals and firms make decisions based on their rational outlook, available information, and past experiences.