In national income accounting, which item is deducted from Gross National Product to obtain Net National Product?
Answer and explanation
Correct answer: Depreciation
Depreciation, also called capital consumption allowance, is deducted from Gross National Product to obtain Net National Product: NNP = GNP − depreciation. It measures the loss in value of fixed capital caused by normal wear, use, and obsolescence during production. Net factor income from abroad converts a domestic measure into a national one, while net indirect taxes convert between market price and factor cost; neither performs the gross-to-net adjustment.
Frequently asked questions
What is the correct answer to this question?
Depreciation
Why is this the correct answer?
Depreciation, also called capital consumption allowance, is deducted from Gross National Product to obtain Net National Product: NNP = GNP − depreciation. It measures the loss in value of fixed capital caused by normal wear, use, and obsolescence during production. Net factor income from abroad converts a domestic measure into a national one, while net indirect taxes convert between market price and factor cost; neither performs the gross-to-net adjustment.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - NNP.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
