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SubjectsEconomics
राष्ट्रीय आय से संबंधित समुच्चय: बाजार मूल्य और साधन लागत
In this Class 12 Economics topic from National Income and Related Aggregates, students learn how national income measures are expressed at market price and factor cost. The topic explains the role of net indirect taxes, including indirect taxes and subsidies, in converting one valuation to the other. Students also connect these concepts with aggregates such as GDP, NDP, GNP and NNP, helping them interpret national income data and apply the relevant relationships in numerical questions.
Correct answer: C. ₹25,000 crore
Explanation: Use the valuation identity MP = FC + NIT. Since net indirect taxes equal 18% of factor cost, let FC = x; then NIT = 0.18x. Therefore 29,500 = x + 0.18x = 1.18x, so x = 29,500 ÷ 1.18 = ₹25,000 crore. The percentage is applied to factor cost, not directly to market price.
Correct answer: C. ₹24,000 crore
Explanation: The governing relation is FC = MP − NIT. Let market price be x. Since net indirect taxes equal 25% of market price, NIT = 0.25x. Therefore, FC = x − 0.25x = 0.75x. Substituting FC = ₹18,000 crore gives 0.75x = 18,000, so x = 18,000 ÷ 0.75 = ₹24,000 crore. Hence option C is correct; the other values do not satisfy the equation.
Correct answer: B. ₹4,800 crore
Explanation: Net indirect taxes are calculated as indirect taxes minus subsidies. Let indirect taxes be 4k and subsidies be 3k, because their ratio is 4:3. Their difference is therefore k. Given net indirect taxes of ₹1,200 crore, k = ₹1,200 crore. Indirect taxes equal 4k = 4 × ₹1,200 = ₹4,800 crore, so option B is correct. The other options do not preserve the stated ratio and difference.
Correct answer: C. ₹1,400 crore
Explanation: Net indirect taxes are calculated as indirect taxes minus subsidies. The ratio 4:7 gives a difference of 3 parts, and the negative value means subsidies are larger by ₹600 crore. Thus 3 parts = ₹600 crore, so 1 part = ₹200 crore. Subsidies equal 7 parts, or 7 × ₹200 = ₹1,400 crore. Therefore option C is correct.
Correct answer: A. Because depreciation is the difference between gross and net
Explanation: GDP is already a gross aggregate, and converting market price to factor cost changes valuation rather than the gross or net status. The required adjustment is net indirect taxes: GDP at FC = GDP at MP − NIT. Depreciation is subtracted only when converting a gross measure into a net measure, such as GDP into NDP. Therefore option A states the relevant distinction.
Correct answer: A. It is the difference between domestic and national aggregates
Explanation: Net factor income from abroad, or NFIA, changes the territorial basis of an aggregate: adding NFIA converts a domestic measure into a national measure. Market price versus factor cost is a valuation distinction and is adjusted through net indirect taxes, not NFIA. Gross versus net is adjusted through depreciation. Therefore option A correctly identifies NFIA’s role.
Correct answer: B. ₹30,600 crore
Explanation: National income is NNP at factor cost. First remove depreciation from GDP to obtain NDP: ₹34,000 − ₹2,800 = ₹31,200 crore. Convert market price to factor cost by subtracting NIT: ₹31,200 − ₹1,500 = ₹29,700 crore. Then add NFIA to convert domestic to national: ₹29,700 + ₹900 = ₹30,600 crore. Thus option B is correct.
Correct answer: C. ₹1,050 crore
Explanation: The governing conversion rule is: NNP at market price = national income (NNP at factor cost) + net indirect taxes. Therefore, net indirect taxes = ₹20,700 − ₹19,950 = ₹750 crore. Since net indirect taxes equal indirect taxes minus subsidies, indirect taxes = ₹750 + ₹300 = ₹1,050 crore. Thus, option C is correct; ₹750 crore is only the net tax amount, while the other values do not satisfy the identity.
Correct answer: B. ₹800 crore
Explanation: The governing identity is output at market price = output at factor cost + net indirect taxes, where net indirect taxes equal indirect taxes minus subsidies. The difference between the two output measures is ₹45,000 − ₹42,200 = ₹2,800 crore. Hence, ₹3,600 − subsidies = ₹2,800, so subsidies = ₹800 crore. Option B is correct; ₹2,800 crore is net indirect tax, not the subsidy.
Correct answer: B. ₹23,300 crore
Explanation: Initially, net indirect taxes are ₹23,500 − ₹22,400 = ₹1,100 crore. When subsidies increase by ₹200 crore and indirect taxes do not change, net indirect taxes fall by ₹200 crore, becoming ₹900 crore. The new NDP at market price is therefore ₹22,400 + ₹900 = ₹23,300 crore. Option B is correct; simply retaining ₹23,500 ignores the subsidy change.
Correct answer: A. ₹31,950 crore and ₹32,400 crore
Explanation: First convert GDP to NDP by subtracting depreciation: ₹36,000 − ₹2,600 = ₹33,400 crore. Net indirect taxes are ₹2,000 − ₹550 = ₹1,450 crore, so NDP at factor cost is ₹33,400 − ₹1,450 = ₹31,950 crore. Add net factor income from abroad to obtain national income: ₹31,950 + ₹450 = ₹32,400 crore. Thus, option A is correct.
Correct answer: D. ₹160 crore
Explanation: Because market price is ₹95 crore below factor cost, net indirect taxes are negative ₹95 crore: MP − FC = NIT = −₹95 crore. Using NIT = indirect taxes − subsidies, we get ₹65 − subsidies = −₹95. Hence subsidies = ₹65 + ₹95 = ₹160 crore. Option D is correct. The negative net tax means subsidies exceed indirect taxes by ₹95 crore.
Correct answer: D. ₹4,640 crore
Explanation: When subsidies exceed indirect taxes by ₹140 crore, net indirect taxes are −₹140 crore. The conversion formula is output at factor cost = output at market price − net indirect taxes. Thus, factor-cost output = ₹4,500 − (−₹140) = ₹4,640 crore. Option D is correct. The negative adjustment raises factor-cost valuation above market-price valuation; subtracting ₹140 would reverse the economic relationship.
Correct answer: C. ₹5,705 crore
Explanation: Initially, net indirect taxes are ₹260 crore. Their change equals the increase in indirect taxes minus the increase in subsidies: ₹80 − ₹35 = ₹45 crore. Therefore, new net indirect taxes are ₹260 + ₹45 = ₹305 crore. Converting GNP at factor cost to market price, add this amount: ₹5,400 + ₹305 = ₹5,705 crore. Hence, option C is correct.
Correct answer: B. ₹180 crore
Explanation: The difference between market price and factor cost equals net indirect taxes. A ₹45 crore fall in indirect taxes lowers net indirect taxes by ₹45 crore, while a ₹15 crore fall in subsidies raises net indirect taxes by ₹15 crore. The net change is −₹45 + ₹15 = −₹30 crore. Therefore, the new difference is ₹210 − ₹30 = ₹180 crore, so option B is correct.
Correct answer: B. Increase of ₹55 crore
Explanation: Since market price = factor cost + indirect taxes − subsidies, a ₹40 crore rise in subsidies and a ₹15 crore fall in indirect taxes reduce net indirect taxes by ₹55 crore in total. With market price fixed, factor cost must move oppositely to preserve the identity. Therefore, factor cost increases by ₹55 crore. Option B is correct; ₹25 crore ignores that both changes lower net indirect taxes.
Correct answer: B. Negative ₹400 crore
Explanation: The governing relationship is Market Price = Factor Cost + Net Indirect Taxes, so Net Indirect Taxes = Market Price − Factor Cost. From FC:MP = 17:16, factor cost = 6,400 × 17/16 = ₹6,800 crore. Therefore, NIT = 6,400 − 6,800 = −₹400 crore. The negative sign means subsidies exceed indirect taxes; hence option B is correct, not the positive distractors.
Correct answer: C. ₹3,600 crore
Explanation: Let factor cost be x crore. The governing identity is Market Price = Factor Cost + Net Indirect Taxes. Since NIT = x/6, 4,200 = x + x/6 = 7x/6. Multiplying by 6/7 gives x = 4,200 × 6/7 = ₹3,600 crore. Therefore option C is correct. The other options fail to produce ₹4,200 crore after adding one-sixth of factor cost.
Correct answer: B. Negative ₹400 crore
Explanation: Since market price = 8/9 of factor cost, factor cost = 3,200 × 9/8 = ₹3,600 crore. Using NIT = Market Price − Factor Cost, NIT = 3,200 − 3,600 = −₹400 crore. The negative value indicates that subsidies exceed indirect taxes. Therefore option B is correct; option A has the wrong sign, and options C and D use an incorrect magnitude.
Correct answer: B. Increase of ₹80 crore
Explanation: Net indirect taxes equal market price minus factor cost. Initially, NIT = 3,400 − 3,150 = ₹250 crore. Later, market price is ₹3,540 crore and factor cost is ₹3,210 crore, so NIT = 3,540 − 3,210 = ₹330 crore. The change is 330 − 250 = ₹80 crore increase. Therefore option B is correct; the individual rises cannot be used as the final NIT change without subtraction.
Correct answer: D. ₹135 crore increase
Explanation: The governing concept is MP − FC = net indirect taxes, so the gap between market price and factor cost is exactly the net indirect tax amount. Its change is final minus initial: ₹55 crore − (-₹80 crore) = ₹135 crore. Therefore, the gap increases by ₹135 crore and option D is correct. ₹55 crore is only the final gap, not the increase.
Correct answer: C. ₹500 crore
Explanation: Use MP = FC + NIT, so the reduced net indirect taxes are ₹7,500 − ₹7,100 = ₹400 crore. After a 20% fall, the remaining amount is 80% of the original amount. If the original amount is x, then 0.80x = ₹400 crore, giving x = ₹400 ÷ 0.80 = ₹500 crore. Thus option C is correct; ₹400 crore is the post-fall amount.
Correct answer: B. ₹500 crore
Explanation: First find the increased net indirect taxes using MP = FC + NIT: ₹5,625 − ₹5,000 = ₹625 crore. This increased amount equals 125% of the original because it rose by 25%. If the original amount is x, then 1.25x = ₹625 crore, so x = ₹625 ÷ 1.25 = ₹500 crore. Hence option B is correct; ₹625 crore is the amount after the rise.
Correct answer: B. ₹500 crore
Explanation: The relevant concept is the valuation adjustment from factor cost to market price: MP = FC + NIT. Thus, the new NIT is ₹5,625 − ₹5,000 = ₹625 crore. Since this is after a 25% increase, it represents 125% of the original. Original NIT = ₹625 ÷ 1.25 = ₹500 crore, so option B is correct. The other amounts do not satisfy both the price difference and the stated percentage.
Correct answer: C. ₹275 crore decrease
Explanation: Since factor cost is unchanged, any change in market price must equal the change in net indirect taxes under MP = FC + NIT. The change in NIT is (-₹35 crore) − ₹240 crore = -₹275 crore. Therefore, market price decreases by ₹275 crore, making option C correct. ₹205 crore incorrectly subtracts magnitudes instead of accounting for the negative second-year value.
