Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 9: Problem 7

In declining order of size, which of these is the proper ranking? (LO2, 4) a) GDP, NDP, national income b) NDP, GDP, national income c) National income, GDP, NDP d) National income, NDP, GDP e) GDP, national income, NDP f) NDP, national income, GDP

Short Answer

Expert verified
a) GDP, NDP, national income

Step by step solution

01

Definition of GDP

Gross Domestic Product (GDP) is the total value of all goods and services produced within a country's borders during a specific time period, usually one year. It is an important indicator of a country's economic health and standard of living.
02

Definition of NDP

Net Domestic Product (NDP) is the total value of all goods and services produced in a country, minus the depreciation of capital assets like buildings, machinery, and equipment. In other words, it is the GDP adjusted for depreciation.
03

Definition of National Income

National income is the sum of all incomes earned by a country's residents and businesses, including wages, profits, rent, and interest. It can be calculated as GDP minus taxes plus government transfer payments, or alternatively as NDP minus depreciation.
04

Relationship between GDP, NDP, and National Income

Since depreciation is always a positive value, it follows that NDP is always smaller than GDP. Similarly, since taxation and government transfer payments are always positive values, it follows that national income is always smaller than GDP or NDP. Thus, the correct order of size is: 1. Gross Domestic Product (GDP) 2. Net Domestic Product (NDP) 3. National Income
05

Match the Correct Answer

Based on our analysis, the correct ranking is: \( GDP > NDP > \text{national income} \). The correct answer is: a) GDP, NDP, national income

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Which would be the most accurate statement? (LO8) a) There is almost no underground economy in the United States. b) Nearly half the goods and services that Americans consume are produced by the underground economy. c) Most of our lawn maintenance and domestic help is supplied by the underground economy. d) The production of the underground economy is included in our GDP.

When there is inflation (LO5) a) real GDP increases faster than nominal GDP b) nominal GDP increases faster than real GDP c) nominal GDP and real GDP increase at the same rate d) there is no way of telling whether nominal GDP or real GDP increases faster

Which equation is correct? (LO2) a) GDP - Depreciation = NDP b) NDP - Depreciation = GDP

Which would be the most valid statement? (LO7, 8) a) The American standard of living is, by far, the highest in the world. b) The standard of living of the average American is about twice that of the average Russian. c) GDP per person in the United States in 2009 was almost half of that in Luxembourg. d) If the underground economy, illegal production, and household production were accurately measured and added to GDP, our GDP would probably rise by less than 1 percent.

Which statement is true? (LO2,8) a) GDP tells us how much we produce as well as what we produce. b) GDP tells us neither how much we produce nor what we produce. c) GDP tells us what we produce. d) GDP tells us how much we produce.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free