It is said that Net Domestic Product NDP is a more realistic assessment of an economy rsquo s resour...........

Economic Affairs Growth and Indicators

It is said that Net Domestic Product (NDP) is a more realistic assessment of an economy’s resources than Gross Domestic Product (GDP). This is because

1. NDP takes into account taxes and subsidies paid which GDP does not.

2. NDP accounts for economic depreciation which GDP does not.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

NDP is basically the GDP minus the total value of the ‘wear and tear’ (depreciation) that happened in the assets while the goods and services were being produced.So, if the depreciation levels are low, it may show the achievements of the economy in the area of research and development which have tried cutting the levels of depreciation in a historical time period.The governments of the economies decide and announce the rates by which assets depreciate (done in India by the Ministry of Commerce and Industry) and a list is published.