Which item has already been deducted in NDP?
Answer and explanation
Correct answer: Depreciation
NDP is defined as GDP minus depreciation: NDP = GDP − consumption of fixed capital. Therefore, depreciation has already been deducted when moving from the gross domestic product to the net domestic product. Net factor income from abroad is used to convert a domestic aggregate into a national aggregate, while exports and subsidies are not the defining deduction in this gross-to-net conversion.
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What is the correct answer to this question?
Depreciation
Why is this the correct answer?
NDP is defined as GDP minus depreciation: NDP = GDP − consumption of fixed capital. Therefore, depreciation has already been deducted when moving from the gross domestic product to the net domestic product. Net factor income from abroad is used to convert a domestic aggregate into a national aggregate, while exports and subsidies are not the defining deduction in this gross-to-net conversion.
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 - NDP.
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