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Choose the correct operation which will be adopted to arrive at GDPMP_{MP} from NNPMP_{MP}.

Solution

✅ Correct Option: 3

Option 1 -> Incorrect: We need to subtract, not add NFIA when converting from National to Domestic.

Option 2 -> Incorrect: We need to add depreciation (not subtract) and Net Indirect Taxes are not involved in this conversion.

Option 3 -> Add depreciation and subtract Net Factor Income From Abroad.

Option 4 -> Incorrect: We need to add depreciation, not subtract it.


Hence, Option 3: Add depreciation and subtract Net Factor Income From Abroad -> To convert from NNP_MP to GDP_MP, we need two adjustments: (1) Add Depreciation: 'Net' excludes depreciation while 'Gross' includes it, so we add back depreciation. (2) Subtract NFIA: 'National' includes Net Factor Income From Abroad while 'Domestic' excludes it, so we subtract NFIA. The formula is: GDP_MP = NNP_MP + Depreciation - NFIA. -> correct

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