In the context of economy, if ______ is deducted from the gross value added to obtain the Net value added obtained.
Depreciation
Gross Value Added (GVA) measures the value of goods and services produced, before accounting for the wear and tear of capital.
To obtain Net Value Added (NVA), depreciation, also called consumption of fixed capital, is deducted from Gross Value Added.
Depreciation represents the loss in value of machinery, buildings and equipment due to their use over time.
The relation is: Net Value Added = Gross Value Added minus Depreciation, so depreciation is the correct answer.
Net indirect tax is deducted to move from value at market price to value at factor cost, not to convert gross to net, so option two is wrong.
Subsidy is a component adjusted within net indirect tax and is not what converts gross value added into net value added, so option three is incorrect.
Wage is a factor payment forming part of value added, not an item deducted to get net value added, so option four is wrong.
Depreciation is deducted from gross value added to obtain net value added.
Similar Questions
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Important Questions from National Income Accounting
- A Giffen good exhibits an upward-sloping demand curve, a unique characteristic where the Law of Demand is violated. This phenomenon primarily arises when the negative income effect of a price change is so substantial that it outweighs the substitution effect. Based on this, which statement correctly describes the nature of the overall price effect and the income effect for a Giffen good?
In the context of Indian economy, consider the following statements:
1) The growth rate of GDP has steadily increased in the last five years.
2) The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct?
The national income of a country for a given period is equal to the
Which of the following Institutions estimate the national income of India?
During a recession when GDP falls, disposable income _______.
