national income

Question 1

1.The term ‘Consumption of Fixed Capital’ with respect to Gross Value Added (GVA) can be replaced by which among the following?
A. Deterioration
 B. Deflation
C. Depreciation
D. Devaluation

Answer 1

1.Consumption of fixed capital (CFC) is a term used in business accounts, tax assessments and national accounts for depreciation of fixed assets. CFC is
used in preference to “depreciation” to emphasize that fixed capital is used up in the process of generating new output, and because unlike depreciation
it is not valued at historic cost but at current market value (so-called “economic depreciation”); CFC may also include other expenses incurred in using or
installing fixed assets beyond actual depreciation charges. Normally the term applies only to producing enterprises, but sometimes it applies also to real
estate assets
CFC tends to increase as the asset gets older, even if the efficiency and rental remain constant to the end.
The larger the depreciation write-off, the larger the gross income of a business.