If GDP at market price is ₹38,000 crore depreciation is ₹3,000 crore net factor income from abroad is ₹1,100 crore and net indirect taxes are ₹1,800 crore what will be national income?
Answer and explanation
Correct answer: ₹34,300 crore
National income is NNP at factor cost. Starting with GDP at market price, subtract depreciation to obtain NDP at market price, add NFIA to convert domestic to national, and subtract net indirect taxes to convert market price to factor cost. Therefore: ₹38,000 − ₹3,000 + ₹1,100 − ₹1,800 = ₹34,300 crore. Option C is correct. Option B omits NFIA and is only NDP at factor cost.
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What is the correct answer to this question?
₹34,300 crore
Why is this the correct answer?
National income is NNP at factor cost. Starting with GDP at market price, subtract depreciation to obtain NDP at market price, add NFIA to convert domestic to national, and subtract net indirect taxes to convert market price to factor cost. Therefore: ₹38,000 − ₹3,000 + ₹1,100 − ₹1,800 = ₹34,300 crore. Option C is correct. Option B omits NFIA and is only NDP at factor cost.
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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