Aggregates related to national income - NDP

Correct answer: B. Net domestic product

Explanation: Gross domestic product measures the value of final goods and services produced within a country before allowing for capital wear and tear. Depreciation is deducted to remove the value of fixed capital used up during production. Therefore, GDP minus depreciation equals net domestic product, or NDP. GNP, personal income, and consumption expenditure are different aggregates and do not represent this calculation.

Correct answer: A. NDP = GDP - Depreciation

Explanation: GDP measures the value of final goods and services produced within the domestic territory before deducting the capital consumed during production. NDP removes that consumption of fixed capital, so depreciation is subtracted: NDP = GDP − Depreciation. Adding depreciation converts a net measure toward a gross measure, not the reverse. Thus, option A is correct.

Correct answer: C. 450

Explanation: Net Domestic Product is obtained by subtracting depreciation from Gross Domestic Product: NDP = GDP − Depreciation. Substituting the given values gives NDP = 500 − 50 = 450. The value 500 is the original GDP, 50 is depreciation alone, and 550 would result from incorrectly adding depreciation. Therefore, the correct numerical answer is 450, or option C.

Correct answer: B. 140

Explanation: The relationship between gross and net domestic product is NDP = GDP − Depreciation. Rearranging gives Depreciation = GDP − NDP. Thus, 900 − 760 = 140. The difference between the gross and net measures represents consumption of fixed capital. Adding GDP and NDP gives 1660, but addition is not the relevant operation when moving from a gross measure to its net measure.

Correct answer: A. Depreciation is deducted in net measures

Explanation: The word net indicates that depreciation, also called consumption of fixed capital, has been deducted from a corresponding gross measure. For example, NDP = GDP − depreciation, and NNP = GNP − depreciation. This adjustment removes the value of capital used up in production. Net measures therefore do consider capital; they simply report output or income after allowing for its consumption.

Correct answer: B. 2500

Explanation: NDP is obtained by subtracting depreciation from GDP: NDP = 2800 − 300 = 2500. NFIA, whether positive or negative, is not used in the GDP-to-NDP conversion because both measures are domestic aggregates. The negative NFIA would matter only for converting a domestic aggregate into a national aggregate.

Correct answer: A. मूल्यह्रास

Explanation: Net domestic product is obtained from gross domestic product by deducting consumption of fixed capital, commonly called depreciation: NDP = GDP − depreciation. Therefore depreciation is the direct variable that explains the difference between the two aggregates. Exports, imports, and population may affect economic activity or other calculations, but they are not the specific deduction that converts GDP into NDP.

Correct answer: A. शुद्ध घरेलू उत्पाद में मूल्यह्रास जोड़कर

Explanation: The conversion rule is NDP = GDP − depreciation. To reverse it and find GDP, add depreciation to NDP: GDP = NDP + depreciation. Adding restores the value of capital consumed during production. Subtracting depreciation would move in the wrong direction and produce a still smaller aggregate, while exports and the assumption of zero depreciation have no role in this direct conversion.

Correct answer: A. Depreciation

Explanation: NDP is obtained from GDP by deducting depreciation, also called consumption of fixed capital. GDP measures the value of gross domestic production before allowing for the wear and tear of machines, buildings, and other fixed assets. Thus, the formula is NDP_MP = GDP_MP − Depreciation. Exports, private consumption, and government expenditure are components of expenditure, not the gross-to-net deduction.

Correct answer: A. Depreciation

Explanation: GDP is Gross Domestic Product, while NDP is Net Domestic Product. Both are domestic and use the same valuation basis when compared consistently; the key difference is that NDP is obtained by subtracting depreciation, or consumption of fixed capital, from GDP. Thus, NDP = GDP − depreciation, making depreciation the correct answer.

Correct answer: A. Subtract depreciation from GDP

Explanation: NDP means Net Domestic Product, while GDP means Gross Domestic Product. The word “net” indicates that the consumption of fixed capital, commonly called depreciation, must be deducted from the gross value. Therefore, NDP = GDP − depreciation. NFIA is used for converting a domestic measure into a national measure, not for converting gross into net.

Correct answer: B. ₹900 crore

Explanation: NDP is calculated by subtracting depreciation from GDP because GDP is a gross measure and NDP is a net measure. Thus, NDP = GDP − depreciation = ₹1000 crore − ₹100 crore = ₹900 crore. ₹1100 crore would incorrectly add depreciation, while ₹1000 crore simply repeats GDP without making the gross-to-net adjustment.

Correct answer: C. ₹1300 crore

Explanation: Net Domestic Product is obtained by subtracting consumption of fixed capital, commonly called depreciation, from Gross Domestic Product. Thus, NDP = GDP − depreciation = ₹1500 crore − ₹200 crore = ₹1300 crore. Depreciation is subtracted because the value of capital used up during production must be excluded from the net measure.

Correct answer: A. 3850 crore

Explanation: NDP at market price is obtained by subtracting depreciation from GDP at market price. Using the formula NDP_MP = GDP_MP − depreciation, we get 4200 − 350 = 3850 crore. Thus, option A is correct. The value 4200 crore is the gross figure before depreciation, while 4550 results from incorrectly adding depreciation.

Correct answer: A. NDP = GDP − Depreciation

Explanation: GDP is a gross domestic measure because it includes the value required to replace worn-out or used fixed capital. To obtain the net domestic product, this depreciation, or consumption of fixed capital, must be subtracted: NDP = GDP − Depreciation. NFIA changes a domestic aggregate into a national aggregate, while exports are not subtracted in this conversion. Thus option A is correct.

Correct answer: A. Depreciation

Explanation: GDP is the gross measure of domestic product, whereas NDP is the net measure. The conversion is NDP = GDP − depreciation, also called consumption of fixed capital. Thus, depreciation alone explains the difference between GDP and NDP; NFIA changes domestic into national measures, and NIT changes valuation.

Correct answer: B. ₹2,200 crore

Explanation: Net Domestic Product is obtained by subtracting depreciation from Gross Domestic Product because depreciation measures the amount of fixed capital used up during production. Therefore, NDP = GDP − depreciation = ₹2,500 crore − ₹300 crore = ₹2,200 crore. Hence option B is correct.

Correct answer: A. ₹14,200 crore

Explanation: Net Domestic Product at market price is obtained by deducting depreciation from Gross Domestic Product at market price: NDPMP = GDPMP − Depreciation. Substituting the figures gives ₹16,000 crore − ₹1,800 crore = ₹14,200 crore. The gross figure includes the value needed to replace worn-out capital, whereas the net figure excludes that depreciation.

Correct answer: A. Depreciation

Explanation: Net Domestic Product is obtained by subtracting depreciation, also called consumption of fixed capital, from Gross Domestic Product. Depreciation represents the value of fixed assets used up during production. The relationship is NDP at market prices = GDP at market prices minus depreciation. Exports, consumption expenditure, and foreign income are not the deduction used in this conversion.

Correct answer: C. 8,800

Explanation: Net Domestic Product is obtained by deducting depreciation, also called consumption of fixed capital, from Gross Domestic Product. The calculation is: NDP = GDP − Depreciation = 10,000 − 1,200 = 8,800. Therefore, option C is correct. The word gross means depreciation has not yet been deducted, while net means it has been deducted.

Correct answer: A. 4400

Explanation: Net domestic product is obtained by subtracting consumption of fixed capital, commonly called depreciation, from gross domestic product. Thus, NDP at market price = GDP at market price − depreciation = 5000 − 600 = 4400. The market-price basis remains unchanged because no adjustment for net indirect taxes is requested.

Correct answer: C. 8700

Explanation: Net Domestic Product is obtained by subtracting consumption of fixed capital, commonly called depreciation, from Gross Domestic Product. The formula is NDP = GDP − depreciation. Thus, NDP = 9500 − 800 = 8700. The gross figure includes the value needed to replace worn-out capital, whereas the net figure removes that depreciation allowance.

Correct answer: C. 3600

Explanation: Net domestic product is obtained after deducting depreciation from gross domestic product. Therefore, the relationship is GDP at market price = NDP at market price + depreciation. Substituting the values gives GDPMP = 3100 + 500 = 3600. Option A would incorrectly subtract depreciation and would produce NDP from GDP, not GDP from NDP.

Correct answer: A. Net Domestic Product

Explanation: NDP stands for Net Domestic Product. “Domestic” means that production is measured within the country’s domestic territory, while “net” means that depreciation, or consumption of fixed capital, has been deducted from GDP. Thus, NDP is calculated as GDP minus depreciation. NNP is a different aggregate because it is based on the national concept and includes net factor income from abroad.

Correct answer: B. GDP minus depreciation

Explanation: NDP is obtained by changing a gross domestic measure into a net domestic measure. The formula is NDP = GDP − depreciation, where depreciation represents the loss of value or consumption of fixed capital during production. Adding depreciation would produce gross investment or move in the opposite direction. GNP minus net factor income from abroad is used to derive GDP, not NDP.