If we deduct depreciation from GNPmp the measures of aggregate income that we obtain is called:
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : NNP mp
When depreciation is deducted from Gross National Product at market prices (GNP MP), the measure of aggregate income that we obtain is called Net National Product at market prices (NNP MP).
Here's the breakdown of the terms:
- GNP MP: Gross National Product at market prices is the total value of goods and services produced by the residents of a country, including net factor income from abroad.
- NNP MP: Net National Product at market prices is GNP MP minus depreciation (the value of worn-out capital and depreciated assets), which gives us the net income earned by residents after accounting for capital depreciation.