An increase in the rate of depreciation is associated with ________.
A)a decrease in the rate of productivity
B)a decrease in gross investment
C)a decrease in net investment
D)an increase in net investment

Question

Quizplus · Accepted Answer

Depreciation is a reduction in the value of an asset over time due to wear and tear or obsolescence. An increase in the rate of depreciation means that the value of assets is declining at a faster rate, which reduces net investment. Net investment is equal to gross investment minus depreciation, so an increase in depreciation lowers net investment. Choices A and B are not associated with the rate of depreciation. Choice D is incorrect because an increase in net investment would require an increase in gross investment or a decrease in depreciation, both of which are not consistent with an increase in the rate of depreciation.

An Increase in the Rate of Depreciation Is Associated with ________