If GVA at market price (GVAₘₚ) is ₹7,20,000, depreciation is ₹80,000, indirect taxes are ₹1,10,000, and subsidy is ₹30,000, what is NVA at factor cost (NVA𝒇𝒄)?
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Answer and explanation
Correct answer: ₹5,60,000
First find net indirect taxes: ₹1,10,000 − ₹30,000 = ₹80,000. To obtain NVA𝒇𝒄 from GVAₘₚ, deduct both depreciation and net indirect taxes: ₹7,20,000 − ₹80,000 − ₹80,000 = ₹5,60,000. Thus option A is correct. Subsidies reduce the net indirect-tax burden rather than being deducted separately again.
Frequently asked questions
What is the correct answer to this question?
₹5,60,000
Why is this the correct answer?
First find net indirect taxes: ₹1,10,000 − ₹30,000 = ₹80,000. To obtain NVA𝒇𝒄 from GVAₘₚ, deduct both depreciation and net indirect taxes: ₹7,20,000 − ₹80,000 − ₹80,000 = ₹5,60,000. Thus option A is correct. Subsidies reduce the net indirect-tax burden rather than being deducted separately again.
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.
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