If there are no statistical discrepancies, NDP (net domestic product) is
A) NI minus net foreign factor income.
B) NI plus corporate income taxes.
C) GDP deﬂated for increases in the price level.
D) GDP minus taxes on production and imports.

Question

Quizplus · Accepted Answer

NDP is calculated by subtracting depreciation from GDP. To arrive at NDP at factor cost, net factor income from abroad is subtracted from the result. This makes the correct answer A, as NI (national income) is GDP minus depreciation and CCA (capital consumption allowance), which when adjusted for net factor income from abroad gives NDP. The other options (B and D) involve calculations which are not part of the NDP formula. Option C is similar, but it involves deflating GDP rather than adjusting for net factor income from abroad.

If There Are No Statistical Discrepancies, NDP (Net Domestic Product)