Angelica owns a factory. She must replace $\$ 10,000$ worth of equipment in the factory every year because it wears out.

What is the term used to describe when capital wears out?
Choose 1 answer:
(A) Investment
(B) Accumulation of capital
(C) Net investment
(D) Depreciation
(E) Gross investment

Question

Angelica owns a factory. She must replace $\$ 10,000$ worth of equipment in the factory every year because it wears out.

What is the term used to describe when capital wears out?
Choose 1 answer:
(A) Investment
(B) Accumulation of capital
(C) Net investment
(D) Depreciation
(E) Gross investment

Accepted Answer

***D*** ∻Key Concept∻ ⚹Depreciation⚹ ∻Explanation∻ ⚹Depreciation is the term used to describe the wear and tear or the reduction in the value of capital as it is used over time. In the context of Angelica's factory, the $10,000 worth of equipment that needs to be replaced each year due to wear and tear is an example of depreciation.⚹◊What impact does depreciation have on a country's GDP in the long run?⍭ Generate me a similar question◊$

Sia