Multiple choice

GNP at market price minus _____ is equal to GDP at market price.

  1. Depreciation

  2. Direct taxes

  3. Subsidies

  4. Net income from abroad
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The relationship is: GNP at market price - Net income from abroad = GDP at market price. GNP includes net factor income from abroad (income earned by residents abroad minus income earned by foreigners domestically). GDP measures domestic production only. Subtracting net income from abroad converts GNP to GDP. Depreciation relates to GNP/NNP, not GNP/GDP conversion.

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