Question
Which of the following will have the largest value while
calculating national income?Solution
NNP = GNP – Depreciation During production process fixed capital assets like machines, building etc. get depreciated and their value goes down. This is known as normal wear and tear of machinery or consumption of fixed capital or depreciation PI is the Part of National Income (NI) which is received by households. Personal Income (PI) = National Income – Undistributed profits – Net interest payments made by households – Corporate tax + Transfer payments to the households from the government and firms
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