National income is derived from gross domestic product by subtracting:

Question

Quizplus · Accepted Answer

National income is derived from gross domestic product by subtracting the depreciation of capital equipment. This is because while GDP measures the total value of goods and services produced in a country, it counts the full value of capital equipment in the year it was produced rather than the value it actually contributes to the economy in that particular year. Subtracting depreciation accounts for this and gives a more accurate measure of the income generated by the economy. Transfer payments, profits, and net exports are not subtracted from GDP to derive national income.

National Income Is Derived from Gross Domestic Product by Subtracting