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.
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