Question

NDP Mp will be equal to:

A. NDPFC + Depreciation
B. NDPFC + Indirect Taxes
C. NDPFC - Subsidies
D. NDPFC + Direct Taxes​

Answer 1

B) NDPFC + Indirect Taxes

Step-by-step explanation:

Net domestic product (NDP) is obtained by subtracting depreciation from gross domestic product (GDP), and it can be calculated at market price (NDPmp) or at factor cost (NDPfc):

• NDPmp = GDPmp – depreciation
• NDPfc = GDPmp – depreciation – indirect taxes

If we substitute NDPfc into option B, we will get:

NDPmp = NDPfc + indirect taxes

NDPmp = (GDPmp - depreciation - indirect taxes) + indirect taxes

NDPmp = GDPmp - depreciation