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.
Frequently asked questions
What is the correct answer to this question?
Indirect taxes and subsidies
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
