Which aggregate is obtained when consumption of fixed capital is deducted from GNP at market prices (GNP₍MP₎)?
Answer and explanation
Correct answer: NNP at market prices (NNP₍MP₎)
GNP at market prices is already a national and market-price aggregate. Consumption of fixed capital is depreciation, and subtracting it changes only the gross character into net; it does not change national scope or valuation from market prices. Thus, GNP₍MP₎ minus depreciation equals NNP₍MP₎. A further deduction of NIT would be needed to obtain NNP₍FC₎, so option A is correct.
Frequently asked questions
What is the correct answer to this question?
NNP at market prices (NNP₍MP₎)
Why is this the correct answer?
GNP at market prices is already a national and market-price aggregate. Consumption of fixed capital is depreciation, and subtracting it changes only the gross character into net; it does not change national scope or valuation from market prices. Thus, GNP₍MP₎ minus depreciation equals NNP₍MP₎. A further deduction of NIT would be needed to obtain NNP₍FC₎, so 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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