If GDP at market price is ₹28,000 crore, depreciation is ₹2,300 crore and net indirect taxes are ₹1,600 crore, what will be NDP at factor cost?
Answer and explanation
Correct answer: ₹24,100 crore
Two adjustments are required. First, deduct depreciation from GDP to obtain NDP; second, deduct net indirect taxes to convert market price into factor cost. Thus, NDP at factor cost = ₹28,000 − ₹2,300 − ₹1,600 = ₹24,100 crore. Option B is correct. ₹25,700 crore deducts only depreciation, while ₹26,400 crore deducts only taxes; ₹23,100 crore subtracts too much.
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What is the correct answer to this question?
₹24,100 crore
Why is this the correct answer?
Two adjustments are required. First, deduct depreciation from GDP to obtain NDP; second, deduct net indirect taxes to convert market price into factor cost. Thus, NDP at factor cost = ₹28,000 − ₹2,300 − ₹1,600 = ₹24,100 crore. Option B is correct. ₹25,700 crore deducts only depreciation, while ₹26,400 crore deducts only taxes; ₹23,100 crore subtracts too much.
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 - Market price and factor cost.
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