GDP vs. NDP: Know the Difference
By Shumaila Saeed || Published on February 8, 2024
GDP (Gross Domestic Product) is the total value of goods and services produced in a country, while NDP (Net Domestic Product) is GDP minus depreciation on a country's capital assets.
Key Differences
GDP measures the total economic output of a country, including all goods and services produced within its borders. NDP adjusts this value by subtracting the depreciation of capital assets, providing a measure that reflects the wear and tear on assets.
Shumaila Saeed
Feb 08, 2024
The key difference between GDP and NDP lies in accounting for depreciation. GDP does not account for the depreciation of capital goods, whereas NDP deducts this depreciation to give a more accurate reflection of the economy's health.
Shumaila Saeed
Feb 08, 2024
Economists use GDP as a primary indicator of economic performance and growth. NDP, while less commonly cited, offers a more sustainable perspective, considering the long-term productivity of the economy.
Shumaila Saeed
Feb 08, 2024
A high GDP can suggest a strong economy, but it doesn't account for the aging of infrastructure and machinery. NDP, by factoring in depreciation, provides a more realistic view of economic growth and sustainability.
Shumaila Saeed
Feb 08, 2024
Both GDP and NDP can be measured in real or nominal terms. Real values are adjusted for inflation, giving a more accurate picture of economic growth over time, while nominal values are measured in current prices.
Shumaila Saeed
Feb 08, 2024
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Comparison Chart
Definition
Total value of produced goods/services
GDP minus depreciation of capital goods
Shumaila Saeed
Feb 08, 2024
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GDP and NDP Definitions
GDP
Indicator of economic growth.
A growing GDP suggests an expanding economy.
Shumaila Saeed
Jan 19, 2024
NDP
Includes depreciation of capital goods.
NDP gives a clearer picture of economic health.
Shumaila Saeed
Jan 19, 2024
GDP
Calculated in real or nominal terms.
The real GDP adjusts for inflation.
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Jan 19, 2024
NDP
Reflects net economic productivity.
A stable NDP indicates good asset management.
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Jan 19, 2024
GDP
Used for economic and fiscal policy.
Government policies aim to increase GDP.
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Jan 19, 2024
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NDP
Indicates the aging of economic assets.
The decline in NDP suggests increasing asset wear.
Shumaila Saeed
Jan 19, 2024
GDP
Total value of all goods and services produced.
The GDP of our country rose last year.
Shumaila Saeed
Jan 19, 2024
NDP
GDP adjusted for asset depreciation.
The NDP provides a more sustainable economic outlook.
Shumaila Saeed
Jan 19, 2024
GDP
A measure of a country's economic performance.
Economists analyze GDP to gauge economic health.
Shumaila Saeed
Jan 19, 2024
NDP
More accurate than GDP for long-term growth.
NDP is considered for long-term economic strategies.
Shumaila Saeed
Jan 19, 2024
GDP
Measure of the United States economy adopted in 1991; the total market values of goods and services by produced by workers and capital within the United States borders during a given period (usually 1 year)
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Jan 18, 2024
Repeatedly Asked Queries
What is GDP?
Gross Domestic Product, the total value of goods and services produced in a country.
Shumaila Saeed
Feb 08, 2024
Can GDP be misleading?
Yes, as it doesn't account for depreciation or income inequality.
Shumaila Saeed
Feb 08, 2024
Is GDP the same as national income?
No, it's a measure of total economic output, not income.
Shumaila Saeed
Feb 08, 2024
What does GDP indicate?
It indicates the overall economic performance of a country.
Shumaila Saeed
Feb 08, 2024
What is NDP?
Net Domestic Product, GDP minus depreciation on capital assets.
Shumaila Saeed
Feb 08, 2024
Is NDP a better indicator than GDP?
It can be more accurate for assessing long-term economic sustainability.
Shumaila Saeed
Feb 08, 2024
What's the difference between real and nominal GDP?
Real GDP is adjusted for inflation, while nominal is not.
Shumaila Saeed
Feb 08, 2024
How is GDP calculated?
By adding up consumption, investment, government spending, and net exports.
Shumaila Saeed
Feb 08, 2024
Does high GDP mean a wealthy population?
Not necessarily, as it doesn't consider wealth distribution.
Shumaila Saeed
Feb 08, 2024
Why is depreciation subtracted in NDP?
To account for the wear and tear on the economy's assets.
Shumaila Saeed
Feb 08, 2024
Is NDP used for economic policy?
Less frequently than GDP, but it's still relevant.
Shumaila Saeed
Feb 08, 2024
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About Author
Written by
Shumaila SaeedShumaila Saeed, an expert content creator with 6 years of experience, specializes in distilling complex topics into easily digestible comparisons, shining a light on the nuances that both inform and educate readers with clarity and accuracy.
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