If GDP at market price is ₹9,000 crore and net indirect taxes are ₹700 crore what will be GDP at factor cost?
Answer and explanation
Correct answer: ₹8,300 crore
To convert GDP at market price into GDP at factor cost, subtract net indirect taxes because market prices include this tax component. The calculation is GDPFC = GDPMP − NIT = ₹9,000 crore − ₹700 crore = ₹8,300 crore. Therefore, option B is correct. ₹9,700 crore comes from incorrectly adding taxes, while ₹9,000 crore ignores the adjustment and ₹7,600 crore uses an incorrect subtraction.
Frequently asked questions
What is the correct answer to this question?
₹8,300 crore
Why is this the correct answer?
To convert GDP at market price into GDP at factor cost, subtract net indirect taxes because market prices include this tax component. The calculation is GDPFC = GDPMP − NIT = ₹9,000 crore − ₹700 crore = ₹8,300 crore. Therefore, option B is correct. ₹9,700 crore comes from incorrectly adding taxes, while ₹9,000 crore ignores the adjustment and ₹7,600 crore uses an incorrect subtraction.
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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