Question : Which of the following is not included in the calculation of net domestic product (NDP)?
Option 1: Depreciation of capital goods
Option 2: Indirect taxes
Option 3: Subsidies
Option 4: Net exports
Correct Answer: Indirect taxes
Solution : The correct answer is (b) Indirect taxes
Indirect taxes are not included in the calculation of net domestic product (NDP). NDP is derived from gross domestic product (GDP) by subtracting the depreciation of capital goods. It is a measure of the net value of output produced by an economy after accounting for the wear and tear of capital assets.
Indirect taxes, such as sales taxes or value-added taxes, are part of the expenditure approach to calculating GDP but are not considered when calculating NDP. Subsidies and net exports, on the other hand, are included in the calculation of NDP as they contribute to the net value of domestic production.
