The user cost of capital is given by the following formula,where P_K is the real price of capital goods,d is the depreciation rate,and r is the expected real interest rate. A)uc = (r + d)/ P_K B)uc = P_K/(r + d) C)uc = dP_K/r D)uc = (r + d)P_K

Question

Quizplus · Accepted Answer

The user cost of capital is calculated as the product of the real price of capital goods and the sum of the depreciation rate and the expected real interest rate, which is represented by (r + d)P_K.

The User Cost of Capital Is Given by the Following