Answer to Question #306593 in Economics of Enterprise for sakib

Question

GNP= $ 4527 NNP= $ 4047 Indirect tax =366 Others net = -2 Find out: (a). Depreciation? (b). NI? (c). why indirect taxes are deducted from NI to calculate NNP?

Answer 1

a. Depreciation

NNP= GNP-Depreciation

Making depreciation to be the b subject of the formula.

Depreciation = GNP-NNP

=$4527-$4047

= $480

b. National Income

= GNP- Depreciation-indirect tax

= $4527-$480-$366

=$3681

c. NNP is the measure of the consumption in a country in a given period of time. It also measures a country's output regardless of whether production took place domestically or in a foreign country.Indirect taxes are deducted because they are accrued by the government.