The difference between Gross Domestic Product and Net Domestic Product equals what?
Answer and explanation
Correct answer: Depreciation
Net Domestic Product is obtained by subtracting depreciation from Gross Domestic Product: NDP = GDP − depreciation. Rearranging gives GDP − NDP = depreciation. Thus, the difference measures the value of capital consumed during production. Exports, wages, and taxes may appear in national accounts, but none of them defines the gross-to-net difference in domestic product.
Frequently asked questions
What is the correct answer to this question?
Depreciation
Why is this the correct answer?
Net Domestic Product is obtained by subtracting depreciation from Gross Domestic Product: NDP = GDP − depreciation. Rearranging gives GDP − NDP = depreciation. Thus, the difference measures the value of capital consumed during production. Exports, wages, and taxes may appear in national accounts, but none of them defines the gross-to-net difference in domestic product.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
