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Consider the following statements.
1. NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP
2. If the country is not able to replace the capital stock lost through depreciation, then GDP will fall
Which of these statements are correct?
- a)1 Only
- b)2 Only
- c)Both 1 and 2
- d)None of them
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements. 1. NDP at Factor Cost measure allo...
Explanation:
Both statements are incorrect. Let's analyze each statement individually:
Statement 1: NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP.
This statement is incorrect. NDP at Factor Cost is a measure used to estimate the net value of national income generated within a country during a specific period. It is calculated by deducting depreciation (i.e., the amount of capital stock lost) from the Gross Domestic Product (GDP). NDP at Factor Cost represents the actual income earned by the factors of production (i.e., labor and capital) within a country. It does not provide information about how much the country has to spend to maintain its current GDP. Therefore, statement 1 is incorrect.
Statement 2: If the country is not able to replace the capital stock lost through depreciation, then GDP will fall.
This statement is also incorrect. Depreciation refers to the decrease in the value of capital stock over time due to wear and tear, obsolescence, or any other factors. While depreciation can have an impact on the productivity and efficiency of capital, it does not directly determine the GDP. GDP is a measure of the total value of goods and services produced within a country's borders during a specific period. It is influenced by various factors such as consumption, investment, government spending, and net exports. Therefore, the inability to replace the capital stock lost through depreciation may affect the long-term growth potential of an economy, but it does not necessarily lead to an immediate fall in GDP. Hence, statement 2 is incorrect.
In conclusion, neither statement 1 nor statement 2 is correct.
Both statements are incorrect. Let's analyze each statement individually:
Statement 1: NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP.
This statement is incorrect. NDP at Factor Cost is a measure used to estimate the net value of national income generated within a country during a specific period. It is calculated by deducting depreciation (i.e., the amount of capital stock lost) from the Gross Domestic Product (GDP). NDP at Factor Cost represents the actual income earned by the factors of production (i.e., labor and capital) within a country. It does not provide information about how much the country has to spend to maintain its current GDP. Therefore, statement 1 is incorrect.
Statement 2: If the country is not able to replace the capital stock lost through depreciation, then GDP will fall.
This statement is also incorrect. Depreciation refers to the decrease in the value of capital stock over time due to wear and tear, obsolescence, or any other factors. While depreciation can have an impact on the productivity and efficiency of capital, it does not directly determine the GDP. GDP is a measure of the total value of goods and services produced within a country's borders during a specific period. It is influenced by various factors such as consumption, investment, government spending, and net exports. Therefore, the inability to replace the capital stock lost through depreciation may affect the long-term growth potential of an economy, but it does not necessarily lead to an immediate fall in GDP. Hence, statement 2 is incorrect.
In conclusion, neither statement 1 nor statement 2 is correct.
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Consider the following statements. 1. NDP at Factor Cost measure allo...
- NDP at factor cost is the income earned by the factors in the form of wages, profits, rent, interest, etc., within the domestic territory of a country with less Depreciation.
- Net Domestic Product at Market Prices: This measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP. If the country is not able to replace the capital stock lost through depreciation, then GDP will fall.
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Consider the following statements. 1. NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP2. If the country is not able to replace the capital stock lost through depreciation, then GDP will fallWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'B'. Can you explain this answer?
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Consider the following statements. 1. NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP2. If the country is not able to replace the capital stock lost through depreciation, then GDP will fallWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. 1. NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP2. If the country is not able to replace the capital stock lost through depreciation, then GDP will fallWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. 1. NDP at Factor Cost measure allows policy-makers to estimate how much the country has to spend just to maintain their current GDP2. If the country is not able to replace the capital stock lost through depreciation, then GDP will fallWhich of these statements are correct?a) 1 Onlyb) 2 Onlyc) Both 1 and 2d) None of themCorrect answer is option 'B'. Can you explain this answer?.
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