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Which of the following statement/s is/are incorrect about Net National Product (NNP)? (a) It shows the net production of goods and services produced in a given financial year adjusted for net factor income from abroad. (b) It includes exports, and imports but does not factor in income from abroad. (c) It is called 'net' because it deducts capital depreciation from total National Income.

Which of the following statement/s is/are incorrect about Net National Product (NNP)? (a) It shows the net production of goods and services produced in a given financial year adjusted for net factor income from abroad. (b) It includes exports, and imports but does not factor in income from abroad. (c) It is called 'net' because it deducts capital depreciation from total National Income. Correct Answer (b) 

The correct answer is (b).

Key Points

  • Net national product or NNP is the market value of all the finished goods and services that are produced by citizens of a nation, living domestically and internationally during a year. Hence statement (a) is incorrect as NNP includes net factor income from abroad.
  • Net national product is also referred to as the value that is obtained by subtracting depreciation from the gross national product (GNP).
  • Net national product considers all the goods, products, and services that are manufactured by the country’s citizens, irrespective of their location, or in other words, net national product considers products that are produced domestically and also from overseas.
  • The net national product at factor cost is the sum total of net values contributed by all producers in the country's local territory plus net factor income from outside. Hence statement (b) is incorrect. 
  • NNP at Factor cost = GNP at Factor Cost - Depreciation allowance. 
  • Alternatively, NNP can be calculated as:
  • ​NNP=Gross National Product−Depreciation. Hence statement (c) is incorrect. 
  • NNP is one of the important metrics for determining the actual growth of a nation.
  • It measures how much the country is able to consume in a given period of time.​

Please Note: As per the first answer key published by the commission, option (3) is given as the correct answer. But as per the final answer key, the question has been canceled by the commission.

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