Depreciation is subtracted from gross domestic product to determine directly

Question

Quizplus · Accepted Answer

Depreciation is the amount of capital that has been consumed in the production process and is not available to society for future production. Therefore, it needs to be subtracted from the gross domestic product (GDP) in order to arrive at the net domestic product (NDP), which is a more accurate measure of the total output of an economy. NDP = GDP – depreciation.

Depreciation Is Subtracted from Gross Domestic Product to Determine Directly