Which formula is correct for NNP?
Answer and explanation
Correct answer: NNP = GNP − Depreciation
The correct basic relationship is NNP = GNP − depreciation. GNP is the gross national product, and depreciation measures the part of fixed capital used up during production. Subtracting it converts the gross national measure into a net national measure. Adding depreciation would move in the wrong direction, while the GDP-minus-imports and NDP-minus-tax expressions do not define NNP. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
NNP = GNP − Depreciation
Why is this the correct answer?
The correct basic relationship is NNP = GNP − depreciation. GNP is the gross national product, and depreciation measures the part of fixed capital used up during production. Subtracting it converts the gross national measure into a net national measure. Adding depreciation would move in the wrong direction, while the GDP-minus-imports and NDP-minus-tax expressions do not define NNP. Therefore, option A is correct.
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.
