Question : Statement 1: Net Domestic Product (NDP) is obtained by deducting depreciation from Gross Domestic Product (GDP).
Statement 2: Depreciation represents the loss in value of capital goods over time.
Option 1: Statement 1 is true, and Statement 2 is false.
Option 2: Statement 1 is false, and Statement 2 is true.
Option 3: Both Statement 1 and Statement 2 are true.
Option 4: Both Statement 1 and Statement 2 are false.
Correct Answer: Statement 1 is true, and Statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and Statement 2 is false.
Statement 1 is true: Net Domestic Product (NDP) is obtained by deducting depreciation from Gross Domestic Product (GDP). Depreciation represents the wear and tear, obsolescence, or depletion of capital goods used in the production process. By subtracting depreciation from GDP, we account for the value of capital goods that have been consumed or used up during the production process, resulting in NDP.
Statement 2 is false: Depreciation represents the loss in value of capital goods over time. It is a measure of the decline in the economic value of capital assets due to factors such as wear and tear, technological advancements, or changes in market conditions. However, it is not a direct representation of the loss in value of capital goods over time.
Therefore, Statement 1 is true, and Statement 2 is false.
