If consumption expenditures are $500, spending on fixed investment is $100, imports are $40, exports are $75, the capital consumption allowance is $25, government spending is $50, and inventories have fallen by $5, then Gross Domestic Product (GDP) is
A) $25 greater than NDP.
B) $20 greater than NDP.
C) $50 greater than NDP.
D) the same as NDP.

Question

Quizplus · Accepted Answer

Gross Domestic Product (GDP) includes the capital consumption allowance (depreciation), whereas Net Domestic Product (NDP) does not. Since the capital consumption allowance is $25, GDP is $25 greater than NDP.

If Consumption Expenditures Are $500, Spending on Fixed Investment Is