How does net domestic product (NDP)differ from gross domestic product (GDP)?
A)GDP includes expenditures for gross products that pollute the environment; NDP does not.
B)GDP is gross because it values spending on each good and service in dollar terms; NDP excludes taxes.
C)GDP includes exports; NDP omits exports.
D)GDP includes all government spending; NDP subtracts taxes.
E)GDP includes that part of the capital stock used up in the production process; NDP does not.

Question

Quizplus · Accepted Answer

NDP is calculated by subtracting depreciation, which represents the value of the capital stock used up in the production process, from the GDP, whereas GDP does not subtract depreciation. Therefore, NDP excludes the part of the capital stock used up in the production process, whereas GDP does not. Choices A, B, C, and D do not accurately describe the difference between NDP and GDP.

How Does Net Domestic Product (NDP)differ from Gross Domestic Product