DEFINITION of 'Capital Consumption Allowance - CCA'

The amount of money a country has to spend each year to maintain its present level of economic production. The capital consumption allowance (CCA) is calculated as a percentage of gross domestic product (GDP). The percentage of GDP that is not allocated to the CCA is called net domestic product and represents investment spending. CCA is also sometimes referred to as depreciation.



BREAKING DOWN 'Capital Consumption Allowance - CCA'

A CCA that is too high a percentage of GDP indicates poor economic growth. This situation occurred in the United States during the Great Recession of 2008. Before the recession, investment spending was $889 billion. By 2009, it had declined 94% to $54 billion from its peak in 2006. Meanwhile, the CCA in 2009 was $1.46 trillion, or about 92% of GDP.

RELATED TERMS
  1. Capital Cost Allowance - CCA

    A yearly deduction or depreciation that can be claimed for income ...
  2. Comparable Company Analysis - CCA

    A process used to evaluate the value of a company using the metrics ...
  3. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced ...
  4. Net Domestic Product - NDP

    An annual measure of the economic output of a nation that is ...
  5. Real Gross Domestic Product (GDP)

    An inflation-adjusted measure that reflects the value of all ...
  6. Expenditure Method

    A method for calculating GDP that totals consumption, investment, ...
Related Articles
  1. Insights

    Walmart Stock: Analyzing 5 Key Suppliers (WMT)

    Find out which suppliers generate large portions of their revenues from Wal-Mart Stores, Inc. and why their relationships are so unique.
  2. Insights

    How To Calculate The GDP Of A Country

    We explain how to calculate the GDP of a country using two different approaches.
  3. Insights

    How To Calculate The GDP Of A Country

    A nation’s gross domestic product measures the monetary value of all of the goods and services it produces.
  4. Insights

    How The GDP Of The US Is Calculated

    The US GDP may not be a perfect economic measure, but the ability to compare it to prior periods and other countries makes it the most applicable.
  5. Insights

    The GDP and its Importance

    GDP is an accurate indication of an economy's size. Few data points can match the GDP and its growth rate's conciseness.
  6. Trading

    Trading GDP Like A Currency Trader

    Investors that understand and utilize the U.S. GDP report have a significant advantage over those that don't.
  7. Insights

    Why Investors and Economists Care About GDP

    Gross Domestic Product is the total dollar value of all goods an economy produces over a given time.
  8. Trading

    Calculating the GDP Price Deflator

    The GDP price deflator adjusts gross domestic product by removing the effect of rising prices. It shows how much an economy’s GDP is really growing.
  9. Insights

    How Is The GDP Of India Calculated?

    India is a front-runner among developing economies. Investopedia explains how India calculates its GDP, an indicator of economic health and performance.
RELATED FAQS
  1. How does the stock market affect gross domestic product (GDP)?

    Find out how the stock market affects gross domestic product (GDP) through two different channels: financial conditions and ... Read Answer >>
  2. Are Social Security payments included in the US GDP calculation?

    Understand how gross domestic product is calculated and whether or not transfer payments such as Social Security are included ... Read Answer >>
  3. What is the benefit of using real GDP over GDP?

    Find out why real GDP allows economists to measure changes in the economic growth or decline of a country more accurately ... Read Answer >>
  4. What is GDP and why is it so important to investors?

    The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents ... Read Answer >>
  5. What impact does the balance of trade have on GDP calculations?

    Read about the impact of the balance of trade on a nation's gross domestic product, and why each of these figures can be ... Read Answer >>
  6. How can I use the rule of 70 to estimate a country's GDP growth?

    Find out about the rule of 70, what it is used for and how to use it to determine the number of years a country's GDP takes ... Read Answer >>
Hot Definitions
  1. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  2. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  3. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  4. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  5. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
  6. Yuppie

    Yuppie is a slang term denoting the market segment of young urban professionals. A yuppie is often characterized by youth, ...
Trading Center