What does the word “Net” indicate in both NNP and NDP?
Answer and explanation
Correct answer: Depreciation has been deducted
In national-income accounting, Net means that consumption of fixed capital, commonly called depreciation, has been deducted from a gross measure. Thus, NNP = GNP − depreciation and NDP = GDP − depreciation. NFIA is used to move between domestic and national concepts, while NIT is used to distinguish market price from factor cost. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
Depreciation has been deducted
Why is this the correct answer?
In national-income accounting, Net means that consumption of fixed capital, commonly called depreciation, has been deducted from a gross measure. Thus, NNP = GNP − depreciation and NDP = GDP − depreciation. NFIA is used to move between domestic and national concepts, while NIT is used to distinguish market price from factor cost. Therefore, option A is correct.
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.
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