Depreciation refers to a decrease in the value of a durable good caused by:
A)an increase in the price level.
B)changes in the interest rate.
C)wear and tear over time.
D)changes in tax laws.
E)a decrease in its resale value.

Question

Quizplus · Accepted Answer

Depreciation is the decrease in the value of a durable good over time due to wear and tear, age, or use. Thus, option C is the correct answer. Option A is incorrect because an increase in the price level would lead to inflation, which is different from depreciation. Option B is incorrect because changes in interest rates may impact the cost of borrowing and investment decisions but have no direct relation to depreciation. Option D is incorrect because changes in tax laws may affect the tax treatment of assets, but they do not cause depreciation. Option E is incorrect because a decrease in resale value may be a consequence of depreciation, but it is not the cause of it.

Depreciation Refers to a Decrease in the Value of a Durable