If GDP at factor cost is ₹2,250 crore, GDP at market price is ₹2,340 crore and subsidies are ₹40 crore, what are indirect taxes?
Answer and explanation
Correct answer: ₹130 crore
Use the identity GDP at market price − GDP at factor cost = Net Indirect Taxes. Thus, NIT = ₹2,340 − ₹2,250 = ₹90 crore. Since NIT = Indirect Taxes − Subsidies, indirect taxes = NIT + Subsidies = ₹90 + ₹40 = ₹130 crore. Option C is correct. Option B is only the net tax amount, while the other choices apply an incorrect adjustment.
Frequently asked questions
What is the correct answer to this question?
₹130 crore
Why is this the correct answer?
Use the identity GDP at market price − GDP at factor cost = Net Indirect Taxes. Thus, NIT = ₹2,340 − ₹2,250 = ₹90 crore. Since NIT = Indirect Taxes − Subsidies, indirect taxes = NIT + Subsidies = ₹90 + ₹40 = ₹130 crore. Option C is correct. Option B is only the net tax amount, while the other choices apply an incorrect adjustment.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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