What does the term “gross” in Gross National Product (GNP) mean?
Answer and explanation
Correct answer: Depreciation is included in output and has not been deducted
“Gross” indicates that depreciation, or the loss of value of fixed capital through use and time, has not yet been deducted from national output. Therefore, GNP is larger than NNP by the amount of depreciation: GNP = NNP + depreciation. Option A describes a net measure rather than a gross measure.
Frequently asked questions
What is the correct answer to this question?
Depreciation is included in output and has not been deducted
Why is this the correct answer?
“Gross” indicates that depreciation, or the loss of value of fixed capital through use and time, has not yet been deducted from national output. Therefore, GNP is larger than NNP by the amount of depreciation: GNP = NNP + depreciation. Option A describes a net measure rather than a gross measure.
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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