Economic-what is depreciation-thank you?

Question

Depreciation refers to a decrease in the value of a good caused by?

an increase in the price level.

a decrease in the price level.

"wear and tear" of capital goods over time.

the depreciation allowance.

a decrease in purchasing power.

Answer 1

It could be two of those things..  Capital can depreciate and an exchange rate can depreciate.

"wear and tear" of capital goods and decrease in purchasing power

Answer 2

c) "wear and tear" of capital goods over time.

Answer 3

"wear and tear" of capital goods over time.

Depreciation is a term used in accounting, economics and finance to spread the cost of an asset over the span of several years.

In simple words we can say that depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, technological outdating or obsolescence, depletion or other such factors.

In economics, depreciation is the decrease in the economic value of the capital stock of a firm, nation or other entity, either through physical depreciation, obsolescence or changes in the demand for the services of the capital in question. If capital stock is C0 at the beginning of a period, investment is I and depreciation D, the capital stock at the end of the period, C1, is C0 + I - D.

Sources:

http://en.wikipedia.org/wiki/Depreciatio...