Question

Net Domestic Product is equal to

• A. Gross Domestic Product $-$ Depreciation
• B. Gross Domestic Product $+$ Depreciation
• C. Gross National Product $-$ Depreciation
• D. Gross National Product $+$ Depreciation

Hint:

To get a net measure, always subtract depreciation; to switch between domestic and national, adjust for net factor income from abroad (NFIA).

Answer 1

The Correct Option is A

Gross vs. Net: "Net" means we deduct depreciation (consumption of fixed capital) from the "gross" measure.
Domestic vs. National: "Domestic" counts production within the domestic territory, irrespective of who owns the factors (residents or non-residents); "National" reassigns income by residency.
Therefore, Net Domestic Product (NDP) is computed from the domestic aggregate:
$ \text{NDP} = \text{GDP} - \text{Depreciation}.$
Options (2) and (4) add depreciation, which would give a gross figure, not net. Option (3) uses national rather than domestic (that would be NNP at market price if matched with other valuation details).