Which national income aggregate is obtained by deducting depreciation from Gross National Product (GNP)?
Answer and explanation
Correct answer: Net National Product (NNP)
Subtracting depreciation, or consumption of fixed capital, from a gross national measure produces the corresponding net national measure: NNP = GNP − depreciation. NNP therefore measures the value of final goods and services after allowing for the capital used up during production. GDP and NDP are domestic-territory aggregates, while personal income is a different income concept and is not obtained by this simple deduction.
Frequently asked questions
What is the correct answer to this question?
Net National Product (NNP)
Why is this the correct answer?
Subtracting depreciation, or consumption of fixed capital, from a gross national measure produces the corresponding net national measure: NNP = GNP − depreciation. NNP therefore measures the value of final goods and services after allowing for the capital used up during production. GDP and NDP are domestic-territory aggregates, while personal income is a different income concept and is not obtained by this simple deduction.
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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