Multiple choice

The difference between 'GDP' and 'NDP' is

  1. Net Indirect Tax

  2. Government Revenue

  3. Consumption of Fixed Capital

  4. Net Capital Formation
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C Correct answer
Explanation

GDP (Gross Domestic Product) measures total output produced within a country, while NDP (Net Domestic Product) subtracts the depreciation of capital goods that occurs during production. This depreciation is called 'Consumption of Fixed Capital' - it represents the wear and tear, obsolescence, or destruction of capital assets (machinery, buildings, infrastructure) used in the production process. The difference GDP - NDP = Consumption of Fixed Capital.

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