GNP at market price is ₹3,000 crore and net indirect taxes are ₹210 crore. What is GNP at factor cost?
Answer and explanation
Correct answer: ₹2,790 crore
For any aggregate, including GNP, the governing conversion is GNP at Factor Cost = GNP at Market Price − Net Indirect Taxes. Substitution gives ₹3,000 crore − ₹210 crore = ₹2,790 crore. Hence option B is correct. ₹3,000 crore is the original market-price value, while ₹3,210 crore would result from adding taxes and moving in the opposite direction; ₹2,580 crore uses an excessive deduction.
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What is the correct answer to this question?
₹2,790 crore
Why is this the correct answer?
For any aggregate, including GNP, the governing conversion is GNP at Factor Cost = GNP at Market Price − Net Indirect Taxes. Substitution gives ₹3,000 crore − ₹210 crore = ₹2,790 crore. Hence option B is correct. ₹3,000 crore is the original market-price value, while ₹3,210 crore would result from adding taxes and moving in the opposite direction; ₹2,580 crore uses an excessive deduction.
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 - GNP.
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