Net national income equals gross domestic product

Question

Quizplus · Accepted Answer

Net national income (NNI) is calculated by subtracting the consumption of fixed capital (depreciation) from gross domestic product (GDP). This adjustment is made because GDP includes investment in new capital goods that will eventually wear out or become obsolete. Therefore, NNI provides a better measure of the income available for consumption and saving in the economy. Sales taxes, government transfer payments, and transfers to other countries are not included in NNI.

Net National Income Equals Gross Domestic Product