In national income accounting, Net National Product (NNP) of a country is defined as which of the following aggregates?

Introduction / Context:
This question tests your understanding of key aggregates used in national income accounting, especially the difference between gross and net measures and between domestic and national concepts. Net National Product (NNP) is one of the central indicators used to measure the net value of goods and services produced by the residents of a country after accounting for depreciation. Knowing how to express NNP in terms of other aggregates is essential for exam questions on macroeconomic measurement.

Given Data / Assumptions:

• We are dealing with four related aggregates: Gross Domestic Product (GDP), Gross National Product (GNP), net income from abroad, and depreciation allowances.
• The options present different combinations of these aggregates to define NNP.
• We assume standard definitions from national income accounting.
• Depreciation allowances represent the consumption of fixed capital during the production process.

Concept / Approach:
Gross National Product measures the total market value of final goods and services produced by the residents of a country during a given period, regardless of where the production occurs. It is related to GDP by the formula GNP = GDP plus net income from abroad. Net National Product is the net form of GNP and is obtained by subtracting depreciation from GNP. In other words, NNP excludes the value needed just to replace worn out capital and reflects the net addition to the capital stock. Thus, the correct definition of NNP is GNP minus depreciation allowances.

Step-by-Step Solution:
Step 1: Recall the relationship between GDP and GNP: GNP = GDP + net income from abroad.Step 2: Understand that gross measures include depreciation, while net measures exclude it.Step 3: Net National Product is therefore computed as NNP = GNP - depreciation.Step 4: Compare this with the options: option (d) explicitly states GNP minus depreciation allowances, which matches the definition.Step 5: Check that other options either mix domestic and national concepts incorrectly or mix gross and net concepts incorrectly.Step 6: Therefore, the correct expression for NNP from the given options is GNP minus depreciation allowances.

Verification / Alternative check:
If you start from GDP and want to reach NNP, you can follow the chain of adjustments. First, add net income from abroad to go from GDP to GNP. Second, subtract depreciation to go from GNP to NNP. Symbolically: NNP = GDP + net income from abroad - depreciation. This is consistent with writing NNP simply as GNP minus depreciation. When you check textbook definitions or example calculations, you will see the same expression used for Net National Product, confirming that option (d) is correct.

Why Other Options Are Wrong:
GDP minus depreciation allowances: This gives Net Domestic Product (NDP), not Net National Product, because it does not adjust for net income from abroad.

GDP plus net income from abroad: This is the definition of Gross National Product (GNP), not NNP, because depreciation has not been subtracted.

GNP minus net income from abroad: This simply returns to GDP and does not account for depreciation; it is therefore not NNP.

Common Pitfalls:
Students often confuse domestic with national aggregates and gross with net aggregates. A helpful approach is to separate the two adjustments: one from domestic to national (adding or subtracting net income from abroad) and one from gross to net (subtracting depreciation). By handling these adjustments step by step, you can quickly check whether a given combination correctly represents NNP or some other aggregate.

Final Answer:
Net National Product (NNP) is defined as Gross National Product (GNP) minus depreciation allowances.