Chapter 13.1, Problem 3R

To determine

To state: The difference between GDP and NDP.

Explanation of Solution

The difference between GDP and NDP is as given below:

GDP	NDP
The value of gross domestic product tells the amount of goods and services that are available within the borders of a country.	Net domestic product accounts for the total value of goods and services considering depreciation in an economy.
While calculating GDP, depreciation is not considered as some goods are not brought into use and are sold without using.	While calculating NDP, depreciation is considered as some production can be lost due to depreciation.
The importance of GDP is that give information about the size of economy and the performance of economy.	The importance of NDP is that it gives a fairer measure of economy as it accounts for depreciation too.

Table (1)

Economics Concept Introduction

Introduction:

Economic performance- The performance of a nation’s economy can be measured by national income accounting. The two major statistics that are used in measuring the national economy are gross domestic product and net domestic product.