If the growth rate of the capital stock is 9 percent, the user cost of capital is 13 percent, the capital depreciation rate is 3 percent, and capital gain is 1 percent, the investment rate is about ________ percent.

Question

Quizplus · Accepted Answer

The investment rate can be calculated using the formula: Investment Rate = (Growth Rate of Capital Stock + Capital Depreciation Rate - Capital Gain) / User Cost of Capital. Plugging in the given values: (9% + 3% - 1%) / 13% = 11% / 13% = 0.846 ≈ 84.6%. To convert this into a percentage of the capital stock, multiply by 100, giving approximately 84.6%. However, this calculation seems to have been misunderstood in the context of the provided options, suggesting a mistake in the interpretation. The correct approach to find the investment rate in the context of the options provided would involve understanding it as a percentage of the cost, not the stock, leading to a different calculation. Given the options and the typical formula for calculating investment rates or costs, none of the calculations directly lead to the options provided without considering the specific context or additional information. The correct interpretation should involve the user cost of capital, growth rate, depreciation, and capital gain in a manner that aligns with standard economic formulas, which typically would not result in an 84.6% figure directly comparable to the options given. Therefore, the correct answer based on the standard approach and the given data should be recalculated or reinterpreted according to the specific economic context and formula intended in the question.

If the Growth Rate of the Capital Stock Is 9