How is NNP calculated?
A) by subtracting savings from the total income of citizens of a nation
B) by subtracting business expenses and taxes from the total profits earned by citizens of a nation
C) by subtracting depreciation from the total income of citizens of a nation
D) by subtracting depreciation from the total profits earned by citizens of a nation

Question

Quizplus · Accepted Answer

NNP (Net National Product) is calculated by subtracting depreciation (wear and tear on capital goods) from the Gross National Product (GNP) of a nation. Option A and B are not correct as they do not account for depreciation, which is a crucial factor in determining the true value of a nation's output. Option D is incorrect because we cannot subtract depreciation from profits, profits are determined after accounting for all expenses including depreciation.

How Is NNP Calculated