Which of the following statements are correct?
(A) NDP at market prices = GDP at market prices − Depreciation.
(B) NDP at market prices = GNP at market prices − Depreciation.
(C) NDP at factor cost is the income earned by factors as wages, profits, rent and interest within the domestic territory.
(D) If depreciation is not made good by replacement, GDP will fall.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (C) and (D) only
NDP is domestic product less depreciation. Subtracting depreciation from a national aggregate gives NNP, not NDP.
(A) NDP at market prices = GDP at market prices − Depreciation. — True. NDPMP = GDPMP − depreciation.
(B) NDP at market prices = GNP at market prices − Depreciation. — False. GNPMP − depreciation is NNPMP.
(C) NDP at factor cost is the income earned by factors as wages, profits, rent and interest within the domestic territory. — True. NDP at factor cost is factor income earned within the domestic territory.
(D) If depreciation is not made good by replacement, GDP will fall. — True. If capital lost through depreciation is not replaced, GDP will fall.
NCERT (2026-27): “Table 2.4: Basic National Income Aggregates This measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP. If the country is not able to replace the capital stock lost through depreciation, then GDP will fall.” “Table 2.4: Basic National Income Aggregates NDP at factor cost is the income earned by the factors in the form of wages, profits, rent, interest, etc., within the domestic territory of a country.” Glossary: “Net Domestic Product (NDP) – Aggregate value of goods and services produced within the domestic territory of a country which does not include the depreciation of capital stock.” “Gross National Product (GNP) … If we deduct depreciation from GNP the measure of aggregate income that we obtain is called Net National Product (NNP). Thus NNP ≡ GNP – Depreciation” |