If GDP at market price is ₹6,500 crore and net indirect taxes are ₹400 crore, what will be GDP at factor cost?
Answer and explanation
Correct answer: ₹6,100 crore
When moving from GDP at market price to GDP at factor cost, net indirect taxes must be subtracted. Using GDP at factor cost = GDP at market price − Net Indirect Taxes, we get ₹6,500 crore − ₹400 crore = ₹6,100 crore. Hence, option B is correct. Adding the tax would produce ₹6,900 crore, which reverses the required conversion.
Frequently asked questions
What is the correct answer to this question?
₹6,100 crore
Why is this the correct answer?
When moving from GDP at market price to GDP at factor cost, net indirect taxes must be subtracted. Using GDP at factor cost = GDP at market price − Net Indirect Taxes, we get ₹6,500 crore − ₹400 crore = ₹6,100 crore. Hence, option B is correct. Adding the tax would produce ₹6,900 crore, which reverses the required conversion.
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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