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Which effect is included in GDP at market price?

Answer and explanation

Correct answer: The net effect of indirect taxes and subsidies

GDP at market price reflects the prices paid by buyers in the market. Compared with factor cost, it includes the net effect of indirect taxes and subsidies, expressed as NIT = indirect taxes − subsidies. NFIA is not part of GDP because GDP is domestic, transfer payments are not payments for current production, and direct taxes are not the relevant adjustment.

Related tags

EconomicsGdpMarket PriceNitIndirect TaxesSubsidiesGdp And WelfareNational Income And Related Aggregates

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