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.
Frequently asked questions
What is the correct answer to this question?
GDP_FC will be greater than GDP_MP
Why is this the correct answer?
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.
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.
