GDP, GNP, NDP, NNP

Hard 30 minExam importance ★★★★★ Sandeep Garg — Macroeconomics, Ch 2

Unit Quiz

1 Quick Explanation 1–3 min

Four aggregates: G(ross) vs N(et) tells you about depreciation; D(omestic) vs N(ational) tells you about NFIA.

Start from GDP, then GNP = GDP + NFIA, NDP = GDP − Depreciation, NNP = GNP − Depreciation.

2 Detailed Notes

Comparison

The four aggregates

Aggregate	Meaning	Relationship
GDP	Gross Domestic Product — output within territory	Starting point
GNP	Gross National Product — residents' output	GDP + NFIA
NDP	Net Domestic Product	GDP − Depreciation
NNP	Net National Product	GNP − Depreciation

Definition

Definitions

GDP = money value of all final goods and services produced within the domestic territory during a year.
GNP = GDP + net factor income from abroad.
NDP = GDP − depreciation (consumption of fixed capital).
NNP = GNP − depreciation.

Key idea

Depreciation (CFC)

Depreciation = consumption of fixed capital — fall in value of machines/buildings due to wear & tear and obsolescence.
It is not a fresh income; it is set aside to replace worn-out capital.
Net concepts subtract it; Gross concepts do not.

Formula

Formula chain

GNP = GDP + NFIA
NDP = GDP − Dep
NNP = GNP − Dep = NDP + NFIA

Move from one aggregate to another by adding/subtracting NFIA (domestic ↔ national) and depreciation (gross ↔ net).

Important

Order of magnitude

Since depreciation and NFIA are usually positive small numbers: GDP > NDP, GNP > NNP. If NFIA is negative, GNP < GDP. Memorise the conversion ladder and you can answer any conversion numerical.

In One Minute

GNP = GDP + NFIA, NDP = GDP − Depreciation, NNP = GNP − Depreciation. Domestic↔National = NFIA; Gross↔Net = Depreciation.

Important for Exam

⭐ Definitions of all four — 1 marker set.
⭐ Conversion numericals: from GDPfc to NNPfc etc. (3–4 marks).
⭐ Depreciation concept and why net < gross.
⭐ NNPfc = National Income (book definition).

Watch & Learn

Watch on YouTube

Measurement Of National Income Complete Chapter One Shot - Economics Class 12 - Cbse 2026

by Next Toppers - 12th Commerce

Why watch? The go-to video for these four aggregates.

Open on YouTube

Watch on YouTube

Measurement Of National Income Complete Chapter One Shot - Economics Class 12 - Cbse 2026

by Next Toppers - 12th Commerce

Why watch? Conversion numericals done step-by-step.

Open on YouTube

When a verified best video is available it plays right here; the button always opens the same video on YouTube. Topics without a verified pick fall back to a live YouTube search from trusted CBSE channels.

Your Personal Note

Notes are saved on this device and appear on your Bookmarks page.