Question:
Which of the following statements is/are CORRECT in the context of National Income Accounting?
Which of the following statements is/are CORRECT in the context of National Income Accounting?
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Know the standard definitions and relationships between GDP, NDP, GNP, and NNP for quick and accurate evaluations.
Updated On: Apr 20, 2025
- Gross Domestic Product (GDP) is the sum of all factor payments.
- Net Domestic Product (NDP) is equal to Gross Domestic Product (GDP) minus depreciation.
- Gross National Product (GNP) is equal to Gross Domestic Product (GDP) plus net income from abroad.
- Net National Product (NNP) is equal to Gross National Product (GNP) minus Gross Domestic Product (GDP).
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The Correct Option is B, C
Solution and Explanation
Analyze the definitions.
(A) Incorrect. GDP includes all goods and services produced domestically. Factor payments relate to the income method but are not directly equal to GDP.
(B) Correct. NDP = GDP − Depreciation.
(C) Correct. GNP = GDP + Net income from abroad.
(D) Incorrect. NNP = GNP − Depreciation, not GDP.
(A) Incorrect. GDP includes all goods and services produced domestically. Factor payments relate to the income method but are not directly equal to GDP.
(B) Correct. NDP = GDP − Depreciation.
(C) Correct. GNP = GDP + Net income from abroad.
(D) Incorrect. NNP = GNP − Depreciation, not GDP.
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