Question : The consumption of fixed capital is also known as_______.
Option 1: depreciation
Option 2: net investment
Option 3: appreciation
Option 4: gross investment
Correct Answer: depreciation
Solution : The correct option is depreciation.
The consumption of fixed capital is also known as depreciation or capital depreciation. It refers to the reduction in the value of fixed assets or capital goods over time due to wear and tear, obsolescence, or other factors. Fixed capital, which includes physical assets like machinery, equipment, buildings, and vehicles, loses value as it gets older and is used in operations.
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