A Reduction in the Value of Capital Goods Over Time

question 12

Multiple Choice

A reduction in the value of capital goods over time due to their use in production is called

• A) waste of finite resources.
• B) erosion.
• C) consumption.
• D) investment.
• E) depreciation.

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Definitions:

Induced Consumption

Consumer spending that increases or decreases as a result of changes in income, as opposed to autonomous consumption that does not change with income.

Disposable Income

Income available to a household or individual after taxes have been paid, available for spending or saving.

Autonomous Consumption

The level of spending on goods and services that occurs even when income is zero, representing non-discretionary, baseline consumption.

Disposable Income

The financial stipend available to households for spending and saving endeavors after income taxes are considered.