Which of the following national income accounting equations is or are INCORRECT? Choose the correct option from the code given below.

Introduction / Context:
National income accounting uses several standard identities relating concepts such as Gross Domestic Product, Gross National Product, Net Domestic Product and National Income. Examination questions often present these relationships and ask you to spot which ones are correct or incorrect. In this question, three equations are given and you must identify which equation or equations are incorrect.

Given Data / Assumptions:
- Equation I: NI = NDP + Net Foreign Income.
- Equation II: GNP = GDP + Net Foreign Income.
- Equation III: NDP = GNP – Depreciation.
- The usual meaning of Net Foreign Income is net factor income from abroad, that is, factor income received from abroad minus factor income paid to the rest of the world.
- It is also assumed that the equations are compared at the same price concept, such as all at market prices or all at factor cost.

Concept / Approach:
Gross National Product is obtained by adding net factor income from abroad to Gross Domestic Product. Thus GNP = GDP + Net Foreign Income is a standard identity. National Income, which is Net National Product at factor cost, can be related to Net Domestic Product by adding net foreign income and then adjusting for net indirect taxes if required. In simplified exam identities, NI = NDP + Net Foreign Income is often accepted, assuming consistent valuation. Net Domestic Product is obtained from Gross Domestic Product by subtracting depreciation, not from Gross National Product. Therefore the equation NDP = GNP – Depreciation is incorrect, because it ignores net foreign income.

Step-by-Step Solution:
Step 1: Evaluate Equation II, GNP = GDP + Net Foreign Income. Gross National Product measures output produced by residents of a country, regardless of where they produce, while GDP measures output produced within the domestic territory. The difference between them is net factor income from abroad. Therefore Equation II is correct.Step 2: Evaluate Equation I, NI = NDP + Net Foreign Income. National Income is Net National Product at factor cost. Starting from Net Domestic Product and then adding net foreign income moves from domestic to national concept. At an exam level, when differences between market price and factor cost are not stressed, this simplified identity is treated as correct.Step 3: Evaluate Equation III, NDP = GNP – Depreciation. Net Domestic Product is obtained by subtracting depreciation from Gross Domestic Product, not from Gross National Product. If we start from GNP and subtract depreciation, we would get Net National Product, not NDP. Thus Equation III is conceptually wrong.Step 4: Combine the evaluations. Equations I and II are acceptable in the simplified exam framework, but Equation III is incorrect. So only Equation III is wrong.

Verification / Alternative check:
You can cross check by writing the full chain of identities. GDP minus depreciation equals NDP. GDP plus net foreign income equals GNP. GNP minus depreciation equals Net National Product. National Income equals Net National Product at factor cost. These links show clearly that subtracting depreciation from GNP gives Net National Product, not NDP, confirming that Equation III is wrong.

Why Other Options Are Wrong:
Option A claims that Equations I and II are both incorrect, which conflicts with the standard relation between GDP, GNP and NI. Option C claims that Equations II and III are incorrect; however, Equation II is correct. Option D claims that only Equation II is incorrect, which again contradicts the basic definition of GNP.

Common Pitfalls:
Students often confuse domestic versus national concepts and gross versus net measures. Another pitfall is ignoring whether the equation is written at market price or factor cost. In many exam questions, some of these details are suppressed to focus on the main conceptual link. Concentrating on which variable is domestic or national and which is gross or net helps to navigate such questions.

Final Answer:
The only incorrect equation among the three is Equation III, so the correct option is Only (III).