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If NIT is negative, what can be the relation between GDP_FC and GDP_MP?

Answer and explanation

Correct answer: GDP_FC will be greater than GDP_MP

The relationship is GDP_MP = GDP_FC + NIT, or GDP_FC = GDP_MP − NIT. If NIT is negative, subtracting a negative number increases the result, so GDP_FC becomes greater than GDP_MP. A negative NIT means subsidies exceed indirect taxes. Therefore, option A is the only correct relation.

Related tags

EconomicsGdpNitSubsidiesFactor CostMarket PriceGdp And WelfareNational Income And Related Aggregates

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