Question:
In national income accounting, depreciation is deducted from gross domestic product to obtain:
In national income accounting, depreciation is deducted from gross domestic product to obtain:
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Gross \(\rightarrow\) Includes depreciation.
Net \(\rightarrow\) Excludes depreciation.
Net \(\rightarrow\) Excludes depreciation.
Updated On: May 25, 2026
- Net Domestic Product
- Gross National Product
- Personal Income
- National Disposable Income
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The Correct Option is A
Solution and Explanation
Concept:
Depreciation refers to the loss in value of fixed capital assets due to wear and tear.
Step 1: Formula relation.
\[ \text{NDP} = \text{GDP} - \text{Depreciation} \]
Step 2: Understanding GDP and NDP.
GDP measures total production within domestic territory.
NDP adjusts GDP after accounting for depreciation.
Step 3: Evaluating options.
(A) Correct because depreciation is deducted from GDP.
(B) GNP includes net factor income from abroad.
(C) Personal income is different from production measures.
(D) Disposable income refers to income available for spending.
Step 4: Final conclusion.
Hence: \[ \boxed{\text{(A) Net Domestic Product}} \]
Step 1: Formula relation.
\[ \text{NDP} = \text{GDP} - \text{Depreciation} \]
Step 2: Understanding GDP and NDP.
GDP measures total production within domestic territory.
NDP adjusts GDP after accounting for depreciation.
Step 3: Evaluating options.
(A) Correct because depreciation is deducted from GDP.
(B) GNP includes net factor income from abroad.
(C) Personal income is different from production measures.
(D) Disposable income refers to income available for spending.
Step 4: Final conclusion.
Hence: \[ \boxed{\text{(A) Net Domestic Product}} \]
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