Distinguish between Net national product and Net domestic product.
Answers
HELLO MATE
Net national product ---- Net national product (NNP) refers to gross national product (GNP), i.e. the total market value of all final goods and services produced by the factors of production of a country or other polity during a given time period, minus depreciation.[1] Similarly, net domestic product (NDP) corresponds to gross domestic product (GDP) minus depreciation.[2] Depreciation describes the devaluation of fixed capital through wear and tear associated with its use in productive activities.
In national accounting, net national product (NNP) and net domestic product (NDP) are given by the two following formulas:
NNP = GNP - DEPRECIATION
NDP = GDP - DEPRECIATION
Although the net national product is a key identity in national accounting, its use in economics research is generally superseded by the use of the gross domestic or national product as a measure of national income, a preference which has been historically a contentious topic (see e.g. Boulding (1948)[3] and Burk (1948)[4]). Nonetheless, the net national product has been the subject of research on its role as a dynamic welfare indicator[5] as well as a means of reconciling forward and backward views on capital wherein NNP(t) corresponds to the interest on accumulated capital.[6] Furthermore, the net national product has featured prominently as a measure in environmental economics such as within models accounting for the depletion of natural and environmental resources[7] or as an indicator of sustainability.
NET DOMESTIC PRODUCT ---- The net domestic product (NDP) equals the gross domestic product (GDP) minus depreciation on a country's capital goods.
Net domestic product accounts for capital that has been consumed over the year in the form of housing, vehicle, or machinery deterioration. The depreciation accounted for is often referred to as "capital consumption allowance" and represents the amount of capital that would be needed to replace those depreciated assets.
If the country is not able to replace the capital stock lost through depreciation, then GDP will fall. In addition, a growing gap between GDP and NDP indicates increasing obsolescence of capital goods, while a narrowing gap means that the condition of capital stock in the country is improving. It reduces the value of capital that is why it is separated from GDP to get NDP.
Production and consumption are two important factors of a particular region's economy.
Similarly,
Net national product means the total production of every type of goods and objects in a nation,at a time period of whole one year.
But on the other hand;
Net domestic product means the total product consumed by a nation in a year.
This consumption amount is also necessary to calculate,in order to plan the upcoming year's financial budgets etc.