What is Net Domestic Product?
TNSCERT Class 10 Economics Ch 1 National Income
Answers
Answer:
Explanation:
The term Net domestic product refers to the net book value of all goods and services which is produced within the country during the specify period of time. It is calculated after subtracting depreciation value on the capital assets of the country like machinery, housing and vehicles etc from the gross domestic product.
Therefore Net Domestic Product = Gross Domestic Product- Depreciation
Net domestic product reflects the capital that has been used in the various forms like housing, machinery or vehicle etc. The depreciation which often takes place under these segments are termed as capital consumption allowance. It simply indicates the amount which might be required to replace the above depreciated assets.
Net domestic product is a good indicator of the economy health. Any increase in Net domestic product reflects a situation of economic stagnation, while a decrease would reflect the current economic condition.
Gross domestic product reflects the economic condition of a country while Net domestic product reflects the speed at which the capital assets deteriorate and need to be replaced. Any failure to do so would lead to a fall in the GDP of the country
Hope this helps.