Question

A ____________ gap between GDP and NDP indicates an increasing obsolescence/depreciation of capital goods..

A. growing C
B. shrinking
C. constant
D. all the above

Answer 1

Step-by-step explanation:

GDP is gross domestic product and NDP is net domestic product.

GDP measures market value of total goods and services produced in a particular period of time.

NDP is net domestic product . In its calculation, we deduct the value of depreciation of capital goods produced from the value of GDP.

So

NDP = GDP - depreciation .

So growing gap between GDP and NDP reflects the increasing obsolescence of capital goods , which warrants replacement of capital goods .

OPTION A is correct.