If output is 5000, intermediate consumption is 2200, and depreciation is 300, what is gross value added?
Answer and explanation
Correct answer: 2800
Gross value added is calculated as output minus intermediate consumption, without deducting depreciation: GVA = 5000 − 2200 = 2800. Depreciation would be used later to move from a gross measure to a net measure, but it is not subtracted when finding GVA. The figure 3100 incorrectly subtracts depreciation as well, while 2500 and 5300 do not follow the GVA formula. Therefore, option B is correct.
Frequently asked questions
What is the correct answer to this question?
2800
Why is this the correct answer?
Gross value added is calculated as output minus intermediate consumption, without deducting depreciation: GVA = 5000 − 2200 = 2800. Depreciation would be used later to move from a gross measure to a net measure, but it is not subtracted when finding GVA. The figure 3100 incorrectly subtracts depreciation as well, while 2500 and 5300 do not follow the GVA formula. Therefore, 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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