What does “gross” mean in GNP?
Answer and explanation
Correct answer: Depreciation has not been deducted
In GNP, “gross” means that depreciation, or the consumption of fixed capital, has not yet been deducted from the value of production. GNP therefore includes the value needed to replace worn-out or used-up capital goods. When depreciation is subtracted from GNP, the result is Net National Product (NNP). NFIA remains relevant to the national measure, so option B is false, and the other options do not define gross.
Frequently asked questions
What is the correct answer to this question?
Depreciation has not been deducted
Why is this the correct answer?
In GNP, “gross” means that depreciation, or the consumption of fixed capital, has not yet been deducted from the value of production. GNP therefore includes the value needed to replace worn-out or used-up capital goods. When depreciation is subtracted from GNP, the result is Net National Product (NNP). NFIA remains relevant to the national measure, so option B is false, and the other options do not define gross.
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 - GNP.
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