Which option explains depreciation correctly in national income terms?
Answer and explanation
Correct answer: Normal wear and obsolescence of fixed capital
Depreciation is the loss in the value or productive capacity of fixed capital due to normal use, ageing, or obsolescence. It is deducted when gross income or investment is converted into a net measure. Household satisfaction relates to consumption, tax collection relates to government revenue, and foreign-currency purchase is a financial transaction, not depreciation.
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What is the correct answer to this question?
Normal wear and obsolescence of fixed capital
Why is this the correct answer?
Depreciation is the loss in the value or productive capacity of fixed capital due to normal use, ageing, or obsolescence. It is deducted when gross income or investment is converted into a net measure. Household satisfaction relates to consumption, tax collection relates to government revenue, and foreign-currency purchase is a financial transaction, not depreciation.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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