Aggregates related to national income - Market price and factor cost

Correct answer: B. ₹300 crore

Explanation: Let subsidies be x crore. The statement says indirect taxes are four times subsidies, so indirect taxes = 4x. By definition, net indirect taxes = indirect taxes − subsidies. Hence 4x − x = ₹900 crore, giving 3x = ₹900 crore and x = ₹300 crore. Therefore, option B is correct. A value of ₹400 crore would produce net indirect taxes of ₹1,200 crore, not ₹900 crore.

Correct answer: B. Minus ₹200 crore

Explanation: Subsidies are 20% higher than ₹1,000 crore, so subsidies = ₹1,000 × 1.20 = ₹1,200 crore. Net indirect taxes are calculated as indirect taxes minus subsidies: ₹1,000 − ₹1,200 = −₹200 crore. Thus option B is correct. The negative sign shows that subsidies exceed indirect taxes by ₹200 crore; option A incorrectly ignores the sign, and option D uses the subsidy amount itself.

Correct answer: B. The gap will narrow

Explanation: The gap between market price and factor cost equals net indirect taxes: MP − FC = indirect taxes − subsidies. If subsidies increase by more than indirect taxes, the difference between these two components falls. Consequently, net indirect taxes decline, and the market-price–factor-cost gap narrows. Therefore option B is correct. The gap would remain unchanged only if both increased by exactly the same amount; there is no basis for claiming it doubles.

Correct answer: A. Market price will be lower first and higher later

Explanation: Use the identity Market Price = Factor Cost + Net Indirect Taxes. When net indirect taxes are negative, market price is below factor cost because subsidies exceed indirect taxes. When the figure becomes positive, market price is above factor cost because indirect taxes exceed subsidies. Hence option A correctly describes the change. The other choices ignore the effect of the sign of net indirect taxes.

Correct answer: B. Negative ₹350 crore

Explanation: For the same aggregate, NDP at market price = NDP at factor cost + net indirect taxes. Rearranging gives net indirect taxes = NDP at market price − NDP at factor cost. Thus, ₹15,600 − ₹15,950 = −₹350 crore. Option B is correct. The negative value means subsidies exceed indirect taxes by ₹350 crore. A positive ₹350 crore would incorrectly reverse the subtraction order.

Correct answer: B. About 4.55 percent

Explanation: First calculate net indirect taxes using NIT = GNP at market price − GNP at factor cost = ₹19,800 − ₹18,900 = ₹900 crore. The question asks for this amount as a percentage of market price, so use ₹19,800 as the denominator: (900 ÷ 19,800) × 100 = approximately 4.55%. Therefore option B is correct. Option C uses factor cost as the denominator, while option D ignores the required ratio.

Correct answer: C. ₹1,800 crore

Explanation: Factor cost is 94% of market price, so factor cost = 0.94 × ₹30,000 crore = ₹28,200 crore. The relationship is net indirect taxes = market price − factor cost. Therefore, NIT = ₹30,000 − ₹28,200 = ₹1,800 crore, making option C correct. The difference is 6% of market price, and 6% of ₹30,000 is also ₹1,800; the other options use incorrect percentages.

Correct answer: B. Minus ₹600 crore

Explanation: Market price equals 97% of factor cost, so market price = 0.97 × ₹20,000 crore = ₹19,400 crore. Using Market Price = Factor Cost + Net Indirect Taxes, net indirect taxes = ₹19,400 − ₹20,000 = −₹600 crore. Therefore option B is correct. The negative amount means subsidies exceed indirect taxes by ₹600 crore; option A has the wrong sign, and the larger values use an incorrect percentage base.

Correct answer: A. Initial amounts of indirect taxes and subsidies

Explanation: Net indirect taxes are calculated as indirect taxes minus subsidies. Since the two percentage changes apply to different starting amounts, the original indirect-tax amount and the original subsidy amount are both essential. The new values would be Tax × 1.15 and Subsidy × 0.90; subtracting the latter from the former gives the new net indirect taxes. Market price, factor cost, and direct taxes alone cannot provide this calculation.

Correct answer: C. ₹900 crore

Explanation: The governing relation is Net Indirect Taxes = Indirect Taxes − Subsidies. The revised tax amount is ₹1,200 × 1.25 = ₹1,500 crore, while the revised subsidy is ₹500 × 1.20 = ₹600 crore. Therefore, new net indirect taxes are ₹1,500 − ₹600 = ₹900 crore. The other options result from failing to apply one of the percentage changes correctly or from subtracting the original amounts.

Correct answer: B. It will fall by ₹400 crore

Explanation: The governing identity is Market Price = Factor Cost + Net Indirect Taxes. Net indirect taxes decrease by ₹1,100 − ₹700 = ₹400 crore. Because factor cost is held constant, the entire decrease passes through to market price. Hence market price falls by ₹400 crore. A fall of ₹700 crore incorrectly treats the final tax value as the change, while no change ignores the tax adjustment.

Correct answer: B. Increase of ₹550 crore

Explanation: Use the identity Factor Cost = Market Price − Net Indirect Taxes. For changes, the increase in factor cost equals the increase in market price minus the increase in net indirect taxes: ₹900 − ₹350 = ₹550 crore. Therefore, factor cost rises by ₹550 crore. Option A uses only the tax change, option C ignores taxes, and option D adds both changes even though taxes must be deducted.

Correct answer: A. Increase of ₹500 crore

Explanation: Market Price = Factor Cost + Net Indirect Taxes. Represent the changes with signs: factor cost changes by +₹700 crore and net indirect taxes by −₹200 crore. Thus, change in market price = +700 + (−200) = +₹500 crore. Market price therefore increases by ₹500 crore. Adding the magnitudes to get ₹900 crore would ignore the fall in taxes, while a decrease has the wrong direction.

Correct answer: B. ₹2,930 crore

Explanation: The governing formula is GDP at factor cost = GDP at market price − net indirect taxes. Net indirect taxes equal indirect taxes minus subsidies: ₹410 − ₹90 = ₹320 crore. Therefore, GDP at factor cost = ₹3,250 − ₹320 = ₹2,930 crore. Option B is correct. Option C would result from adding the net tax instead of subtracting it, while option A subtracts the gross tax and ignores the subsidy.

Correct answer: C. ₹2,335 crore

Explanation: To move from factor cost to market price, the governing rule requires adding net indirect taxes: NDP at market price = NDP at factor cost + net indirect taxes. Substituting the data gives ₹2,150 + ₹185 = ₹2,335 crore. Therefore, option C is correct. Option A incorrectly subtracts the tax, option B makes no adjustment, and option D adds the amount twice or uses an incorrect base.

Correct answer: C. ₹315 crore

Explanation: The difference between market-price and factor-cost GDP gives net indirect taxes: ₹3,600 − ₹3,380 = ₹220 crore. Since net indirect taxes = indirect taxes − subsidies, indirect taxes = net indirect taxes + subsidies = ₹220 + ₹95 = ₹315 crore. Therefore, option C is correct. Option B is only the net indirect tax, not the gross indirect-tax amount.

Correct answer: C. Factor cost will exceed market price

Explanation: The governing identity is Market Price = Factor Cost + Net Indirect Taxes, where Net Indirect Taxes equal indirect taxes minus subsidies. If subsidies are greater than indirect taxes, net indirect taxes are negative. Therefore, market price is lower than factor cost, meaning factor cost exceeds market price. Option A reverses the inequality, while B applies only when the two amounts are equal.

Correct answer: A. Indirect taxes ₹180 crore and subsidies ₹30 crore

Explanation: Use NNP at market price = NNP at factor cost + net indirect taxes. Thus, net indirect taxes = ₹2,400 − ₹2,250 = ₹150 crore. Since net indirect taxes equal indirect taxes minus subsidies, the required pair must have a difference of ₹150 crore. Option A gives ₹180 − ₹30 = ₹150 crore. The other pairs give ₹100, ₹130 and −₹150 crore respectively.

Correct answer: B. ₹80 crore

Explanation: Net indirect taxes are calculated as indirect taxes minus subsidies. A ₹35 crore fall in indirect taxes reduces net indirect taxes by ₹35 crore, and a ₹25 crore rise in subsidies reduces them by another ₹25 crore. The total reduction is ₹60 crore. Therefore, new net indirect taxes = ₹140 − ₹60 = ₹80 crore. Option B is correct; simply subtracting ₹35 would miss the subsidy change.

Correct answer: B. ₹80 crore

Explanation: The governing relation is Net Indirect Taxes = Indirect Taxes − Subsidies. Let indirect taxes be T. Given net indirect taxes are −₹45 crore and subsidies are ₹125 crore: T − 125 = −45. Adding 125 to both sides gives T = 80. Therefore, indirect taxes are ₹80 crore, so option B is correct. Option D incorrectly adds the absolute values of the negative net tax and subsidy.

Correct answer: C. ₹2,535 crore

Explanation: First calculate net indirect taxes: ₹300 crore − ₹85 crore = ₹215 crore. The identity is NNP at market price = NNP at factor cost + net indirect taxes. Rearranging, NNP at factor cost = ₹2,750 − ₹215 = ₹2,535 crore. Therefore option C is correct. Option D adds net taxes instead of subtracting them, while A and B use incorrect deductions.

Correct answer: B. ₹3,125 crore

Explanation: In national-income accounting, national income is NNP at factor cost. To obtain NNP at market price, add net indirect taxes: NNP at market price = NNP at factor cost + NIT. Hence, ₹3,200 + (−₹75) = ₹3,125 crore. Option B is correct. Because NIT is negative, the market-price value is lower than factor cost; adding ₹75 instead would incorrectly produce option D.

Correct answer: C. Increase of ₹75 crore

Explanation: Market price equals factor cost plus net indirect taxes. A ₹55 crore rise in indirect taxes increases net indirect taxes by ₹55 crore. A ₹20 crore fall in subsidies also increases net indirect taxes by ₹20 crore because subsidies are subtracted. Thus, net indirect taxes rise by ₹75 crore. With factor cost unchanged, market price must increase by the same ₹75 crore. Option C is correct.

Correct answer: B. Indirect taxes ₹90 crore and subsidies ₹210 crore

Explanation: The governing relationship is MP − FC = net indirect taxes = indirect taxes − subsidies. The required difference is −₹120 crore, so subsidies must exceed indirect taxes by ₹120 crore. In option B, ₹90 − ₹210 = −₹120 crore, exactly matching the condition. Options A, C and D produce +₹120 crore, because their taxes exceed subsidies or subsidies are zero. Hence B is the only valid combination.

Correct answer: B. ₹420 crore

Explanation: The governing concept is that GDP at market price equals GDP at factor cost plus net indirect taxes. Since the market-price value is 7% higher than factor cost, the net indirect tax amount is 7% of ₹6,000 crore: (7/100) × 6,000 = ₹420 crore. Therefore, option B is correct. ₹6,420 crore is the resulting GDP at market price, not the net indirect taxes; the other numerical choices use incorrect percentages.