For the firm in the real intertemporal model with investment
A) depreciation occurs more quickly if the firm produces more output.
B) depreciation takes place at a constant rate.
C) depreciation can be slowed with more maintenance.
D) depreciation is always 100%.

Question

Quizplus · Accepted Answer

In the real intertemporal model with investment, depreciation takes place at a constant rate. This means that the amount of capital stock in the economy decreases at the same rate over time, regardless of the level of output being produced or the amount of maintenance being performed.

For the Firm in the Real Intertemporal Model with Investment