GDP at market price is ₹2,400 crore. Indirect taxes are ₹320 crore and subsidies are ₹80 crore. What is GDP at factor cost?
Answer and explanation
Correct answer: ₹2,160 crore
To convert GDP at market price into GDP at factor cost, subtract net indirect taxes. Net Indirect Taxes = Indirect Taxes − Subsidies = 320 − 80 = ₹240 crore. Therefore, GDP at Factor Cost = GDP at Market Price − Net Indirect Taxes = 2,400 − 240 = ₹2,160 crore. Equivalently, 2,400 − 320 + 80 gives the same result. Hence, option C is correct.
Frequently asked questions
What is the correct answer to this question?
₹2,160 crore
Why is this the correct answer?
To convert GDP at market price into GDP at factor cost, subtract net indirect taxes. Net Indirect Taxes = Indirect Taxes − Subsidies = 320 − 80 = ₹240 crore. Therefore, GDP at Factor Cost = GDP at Market Price − Net Indirect Taxes = 2,400 − 240 = ₹2,160 crore. Equivalently, 2,400 − 320 + 80 gives the same result. Hence, option C is correct.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - GDP.
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