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GDP at market price includes the effect of what?

Answer and explanation

Correct answer: Indirect taxes and subsidies

GDP at market price values final output at the prices actually paid by purchasers. These prices include indirect taxes and are reduced by subsidies; together they form net indirect taxes (NIT = indirect taxes − subsidies). The relationship is GDP at market price = GDP at factor cost + NIT. Personal taxes, transfer payments, and depreciation are not the relevant market-price adjustment.

Related tags

EconomicsGdpMarket PriceFactor CostNitNational IncomeGdp And WelfareNational Income And Related Aggregates

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