For a given level of GDP, an increase in depreciation will
A) increase gross domestic product.
B) reduce net national product.
C) not affect disposable personal income.
D) increase savings and reduce consumption expenditures.

Question

Quizplus · Accepted Answer

An increase in depreciation will reduce net national product because it represents the amount of capital that has been used up during the production process and is no longer available for use. This reduces the amount of income that can be generated from the given level of GDP.

For a Given Level of GDP, an Increase in Depreciation