Question

Suppose GDP is $16 trillion, with $10 trillion coming from consumption, $2 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $500 billion coming from net exports. Also suppose that across the whole economy, depreciation (consumption of fixed capital) totals $1 trillion. From these figures, we see that net domestic product equals:(A) $17.0 trillion(B) $16.0 trillion(C) $15.5 trillion(D) Non of the above

Answer 1

The correct answer is option D.

Step-by-step explanation:

NDP or net domestic product is calculated by deducting depreciation from GDP or gross domestic product.

Gross domestic product is the measure of final goods and services produced in an economy in a given time period, generally a year.

Gross domestic product will be the sum of consumption, investment, government expenditure and net exports.

NDP

=GDP-Depreciation

=$(16-1)

=$15 trillion

So, NDP is $15 trillion.