How Does Net Domestic Product (NDP)differ from Gross Domestic Product

question 147

Multiple Choice

How does net domestic product (NDP) differ from gross domestic product (GDP) ?

• A)GDP includes expenditures for gross products that pollute the environment; NDP does not.
• B)GDP is gross because it values spending on each good and service in dollar terms; NDP excludes taxes.
• C)GDP includes exports; NDP omits exports.
• D)GDP includes all government spending; NDP subtracts taxes.
• E)GDP includes that part of the capital stock used up in the production process; NDP does not.

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Definitions:

Output

The quantity of goods or services produced within a given time period.

Factor Prices

The costs of the inputs that are used in the production of goods or services.

Production Function

A mathematical relationship describing the maximum output possible from a given set of inputs.

Units Of Output

The total quantity of goods or services produced by a company or industry in a specific period.