If GDP at factor cost is 2950 crore rupees and depreciation is 190 crore rupees, then what is NDP at factor cost?
Answer and explanation
Correct answer: 2760 crore rupees
To move from a gross aggregate to its net counterpart, deduct depreciation. The valuation basis does not change, so factor-cost GDP is converted directly into factor-cost NDP: NDP at factor cost = GDP at factor cost − depreciation = 2950 − 190 = 2760 crore rupees. Option A adds depreciation, option C ignores it, and option D subtracts an incorrect amount. Thus option B is correct.
Frequently asked questions
What is the correct answer to this question?
2760 crore rupees
Why is this the correct answer?
To move from a gross aggregate to its net counterpart, deduct depreciation. The valuation basis does not change, so factor-cost GDP is converted directly into factor-cost NDP: NDP at factor cost = GDP at factor cost − depreciation = 2950 − 190 = 2760 crore rupees. Option A adds depreciation, option C ignores it, and option D subtracts an incorrect amount. Thus option B is correct.
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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