Question
Download Solution PDFWhich of the following is the correct formula for calculating NNP?
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFKey Points
- NNP = GNP – DEPRECIATION is the correct formula for calculating Net National Product (NNP).
- Net National Product (NNP) is derived by subtracting depreciation from the Gross National Product (GNP).
- Depreciation accounts for the wear and tear, decay, or obsolescence of capital assets over time.
- GNP includes the total value of goods and services produced by the residents of a country, including income from abroad.
Additional Information
- Gross National Product (GNP) measures the economic performance of a country by including the value of all final goods and services produced by its residents, regardless of the location of production.
- Depreciation represents the reduction in the value of capital assets over time due to factors like wear and tear, decay, or obsolescence.
- Net National Product (NNP) gives a more accurate picture of the economic well-being of a country by accounting for depreciation.
- Economists and policymakers use NNP to assess the sustainability of economic growth and the long-term economic health of a country.
Last updated on May 28, 2025
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