Q.Distinguish between Gross Domestic Product (GDP) and Net Domestic Product (NDP).
Gross Domestic Product (GDP) measures the total (gross) value of all final goods and services produced within a country's domestic territory in a year — it makes no allowance for the fact that some of the country's capital stock (machinery, buildings, equipment) is worn out or used up in the process of that year's production.
Net Domestic Product (NDP) corrects for this by deducting Consumption of Fixed Capital (depreciation) — the estimated value of capital assets used up during the year:
NDP is therefore a more accurate measure of the net addition to a country's output/wealth during the year, because it does not treat the mere replacement of worn-out capital as if it were new output. GDP, being gross, will always be numerically greater than (or, in the unrealistic case of zero depreciation, equal to) NDP.
GDP is the gross value of domestic output; NDP = GDP − Depreciation, i.e., GDP after deducting the value of capital consumed during production.
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