The capital consumption allowance
A) includes income payments to the rest of the world.
B) includes income payments from the rest of the world.
C) is not separated from the statistical discrepancy as an adjustment to national income.
D) is an allowance for depreciation.

Question

Quizplus · Accepted Answer

The capital consumption allowance is an allowance for depreciation, the loss in value of capital goods over time due to wear and tear or obsolescence. It is deducted from gross domestic product (GDP) to arrive at net domestic product (NDP). Option A, income payments to the rest of the world, is not relevant to the concept of capital consumption allowance. Option B, income payments from the rest of the world, is also not relevant to the concept of capital consumption allowance. Option C, separating the capital consumption allowance from the statistical discrepancy, is not related to the definition or purpose of the capital consumption allowance.

The Capital Consumption Allowance