Aggregates related to national income - Market price and factor cost

Correct answer: A. ₹19,250 crore and ₹19,000 crore

Explanation: Net indirect taxes equal indirect taxes minus subsidies: ₹1,500 − ₹450 = ₹1,050 crore. Therefore NDPFC = GDPMP − depreciation − NIT = 22,000 − 1,700 − 1,050 = ₹19,250 crore. National income equals NDPFC plus NFIA, so it is 19,250 + (−250) = ₹19,000 crore. Thus option A is correct.

Correct answer: C. ₹140 crore

Explanation: The governing relation is MP − FC = net indirect taxes, and net indirect taxes equal indirect taxes minus subsidies. Since MP equals FC, the difference is zero. Therefore, 140 − subsidies = 0, so subsidies = ₹140 crore. Option C is correct. Zero would leave a positive difference, while ₹70 crore and ₹280 crore would produce non-zero differences in the wrong direction or size.

Correct answer: B. ₹3,000 crore

Explanation: Use the aggregate-conversion sequence. First, subtract depreciation from GDP at market price: NDP at market price = 3,500 − 300 = ₹3,200 crore. Then subtract net indirect taxes to convert market price into factor cost: NDP at factor cost = 3,200 − 200 = ₹3,000 crore. Hence option B is correct. ₹3,200 crore stops before the tax adjustment, while the other values apply an incorrect operation.

Correct answer: C. ₹4,030 crore

Explanation: The governing identities are NNP at factor cost = GNP at factor cost − depreciation, and NNP at market price = NNP at factor cost + net indirect taxes. Thus NNP at factor cost = 4,100 − 250 = ₹3,850 crore. Adding ₹180 crore gives NNP at market price = 3,850 + 180 = ₹4,030 crore. Option C is correct; subtracting the tax or ignoring depreciation gives the distractor values.

Correct answer: C. ₹4,900 crore

Explanation: First convert GDP to NDP by subtracting depreciation: NDP at market price = 5,200 − 400 = ₹4,800 crore. Next use NDP at factor cost = NDP at market price − net indirect taxes. Because net indirect taxes are −₹100 crore, the calculation is 4,800 − (−100) = ₹4,900 crore. Therefore option C is correct. The negative sign increases the factor-cost value rather than reducing it.

Correct answer: B. ₹4,000 crore

Explanation: Use FC = MP − NIT. Since NIT is negative 10% of market price, NIT = −0.10x. Thus FC = x − (−0.10x) = 1.10x. Substituting the given factor cost, ₹4,400 = 1.10x, so x = ₹4,400 ÷ 1.10 = ₹4,000 crore. Therefore option B is correct. A negative net indirect tax means subsidies exceed indirect taxes, so factor cost is greater than market price.

Correct answer: B. 1 percent fall

Explanation: Percentage changes in successive periods apply to different bases. If initial real GDP is 100, a 10 percent rise makes it 110. A 10 percent fall in the second year is calculated on 110, so the result is 110 × 0.90 = 99. Compared with the initial 100, this is a 1 percent fall. Equal percentage rises and falls therefore do not cancel; option B is correct.