In national income accounting, NNP is derived by subtracting from the GNP?
Answer Details
National Income Accounting is a way of measuring a country's economic performance. GNP (Gross National Product) is the total value of all goods and services produced by a country's residents and businesses, including those produced abroad, during a specified period. NNP (Net National Product) is derived by subtracting the depreciation or capital consumption of fixed assets from GNP. In other words, it represents the value of goods and services produced by a country's residents and businesses, minus the amount of capital that has been used up in the process of producing them. This subtraction accounts for the amount of wear and tear on the machinery, buildings, and other assets that were used to produce the goods and services. Therefore, the correct answer to the question is "capital consumption."