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1.What are the two components of the user cost of capital? Explain why each is a cost of using a capital good. 2.Use the concepts

1.What are the two components of the user cost of capital? Explain why each is a cost of using a capital good.

2.Use the concepts of income effect and substitution effect to explain why the effect on desired saving of an increase in the expected real interest rate is potentially ambiguous.

Define the expected real after-tax interest rate. If the tax rate on interest income

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