In national income accounting, NNP is derived by subtracting from the GNP?

  • A transfer payments
  • B indirect taxes
  • C allowance for wastage
  • D capital consumption
jamb 2001economics

The correct answer is D. capital consumption

In national income accounting, Net National Product (NNP) is derived from Gross National Product (GNP) by subtracting capital consumption (also known as depreciation).

This accounts for the wear and tear on capital goods (like machinery and buildings) over time.

So, NNP represents the total income of a nation’s residents (including businesses and corporations) that remains after taking into account depreciation. The other options do not correctly define how NNP is derived from GNP.

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