Which form of national product represents output before depreciation is deducted?
Answer and explanation
Correct answer: Gross National Product
A gross measure is calculated before deducting depreciation, which represents the wear and tear or consumption of fixed capital during production. Gross National Product therefore shows national output before this deduction. When depreciation is subtracted from GNP, the result is Net National Product: NNP = GNP − depreciation. Hence, option A is correct.
Frequently asked questions
What is the correct answer to this question?
Gross National Product
Why is this the correct answer?
A gross measure is calculated before deducting depreciation, which represents the wear and tear or consumption of fixed capital during production. Gross National Product therefore shows national output before this deduction. When depreciation is subtracted from GNP, the result is Net National Product: NNP = GNP − depreciation. Hence, 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 - GNP.
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