| Net Domestic Product |
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The Net Domestic Product (NDP) equals the Gross Domestic Product (GDP) minus Depreciation on a country's Capital goods. This is an estimate of how much the country has to spend to maintain the current GDP. If the country is not able to replace the capital stock lost through depreciation, then GDP will fall. In addition, a growing gap between GDP and NDP indicates increasing obsolescence of capital goods, while a narrowing gap would mean that the condition of capital Stock in the country is improving. Source: WebFinance Inc. Economists define depreciation as applying to capital goods. The purchases of automobiles by consumers are also added to the Gross Domestic Product. These automobiles wear out and therefore depreciate, reducing the Net Worth of consumers. This depreciation is ignored by the economics profession as noted by Raymond W. Goldsmith PhD in 1952. "consumption of durable consumer goods on which no depreciation is figured in the national income accounts." The Growth of Reproducible Wealth of the United States of America from 1805 to 1950 (Income and Wealth Series II, 1952). by RAYMOND W. GOLDSMITH Similarly we would probably under-estimate the adverse effects of depressions or periods of long drawn-out economic decline, particularly to the extent that there is failure to make good current consumption of durable consumer goods on which no depreciation is figured in the national income accounts. The entirety of the document can be found here. http://www.roiw.org/2/3.pdf Curiously no link to the above was found here: http://www.roiw.org/ The Review of Income and Wealth Journal of the International Association for Research in Income and Wealth 1951-2002 |
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