Q.Define national income. Distinguish between Gross Domestic Product (GDP) and Gross National Product (GNP).

The economic term is Depreciation (also called the capital consumption allowance).

When fixed capital such as machinery, buildings and equipment is used in production, it slowly wears out and loses value through use, ageing and obsolescence. This loss of value is called depreciation. It is important in national income accounting: subtracting depreciation from gross values gives net values — for instance, NDP = GDP minus Depreciation, and NNP = GNP minus Depreciation.

The odd word is Fish.

Goods are classified by their durability. Durable goods — like furniture, a cupboard and a washing machine — last long and can be used again and again over many years. Perishable or non-durable goods get used up quickly or spoil soon. Fish is perishable and cannot be stored or used repeatedly, so it does not belong with the durable goods in the list.

The odd word out is Static concept. National income is a flow concept measured in money value over a financial year; it is dynamic, not static. Odd one: Static concept.

Why: The features of national income include:

• It is measured for a definite period, usually a financial year (1 April to 31 March in India).
• It is always expressed in money value, as goods and services are heterogeneous and can only be added up in money terms.
• It is a flow concept — it measures the value of output/income produced during a period, so it keeps flowing and changing year to year.

Therefore describing it as a static concept contradicts its true nature (a flow that varies over time), which makes 'Static concept' the odd word.

The term described is National Income — the aggregate money value of all final goods and services produced in an economy during a given period, measured without double counting.

National income (national product) is the total flow of goods and services produced by the residents of a country in an accounting year, expressed in money value. To measure it correctly, only final goods and services (or the value added at each stage) are counted; intermediate goods are excluded so that the same output is not counted more than once. This avoidance of duplication (double counting) is exactly what the phrase 'counted without duplication' refers to.

The economic term is Gross Domestic Product (GDP) at market prices — the gross market value of all final goods and services produced within the domestic territory of a country in a year.

The wording of the definition fixes each part of the aggregate:

• 'Within the domestic territory' — it is a domestic concept (production located inside the country), not a national one that would count residents' income earned abroad.
• 'Gross' — depreciation (consumption of fixed capital) has not been deducted.
• 'Market value' — output is valued at market prices, not factor cost.
• 'Final goods and services' — only final output is counted, to avoid double counting.

All four together define GDP at market prices.