Question

Which of the following does not include the value of depreciation ?

• A. GDP
• B. GNP
• C. NNP
• D. All of these

Hint:

Remember this simple rule: G for Gross includes depreciation. N for Net excludes depreciation. To get from Gross to Net, you always subtract depreciation.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
This question relates to national income accounting. The key difference between "Gross" and "Net" economic measures is depreciation. Depreciation (or Consumption of Fixed Capital) is the wear and tear of capital goods during the production process.

Step 2: Key Formula or Approach:
The fundamental relationship is:
\[ \text{Gross Value} - \text{Depreciation} = \text{Net Value} \]

Step 3: Detailed Explanation:
\[\begin{array}{rl} \bullet & \text{GDP (Gross Domestic Product) and GNP (Gross National Product) are "Gross" measures, so they include the value of depreciation.} \\ \bullet & \text{NNP (Net National Product) is a "Net" measure. It is calculated by subtracting depreciation from GNP:} \\ \end{array}\]

Step 4: Final Answer:
NNP (Net National Product) does not include the value of depreciation.