How does depreciation affect nominal GDP?

Economics Real Vs Nominal Gdp Questions



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How does depreciation affect nominal GDP?

Depreciation does not directly affect nominal GDP. Nominal GDP is calculated by adding up the current market value of all final goods and services produced within a country's borders during a specific time period. Depreciation, which refers to the decrease in value of physical capital over time, is accounted for in the calculation of net domestic product (NDP) or gross national product (GNP), but not in nominal GDP.