Depreciation in the national income accounts

Question

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Depreciation in the national income accounts refers to the wear and tear of capital goods used in production, which reduces their value over time. This is an allowance or deduction from the gross domestic product (GDP) to arrive at the net domestic product (NDP), which accounts for the capital consumed in production. It does not relate to international exchange rates, inflation, natural resources, or the time value of money.

Depreciation in the National Income Accounts