If national income is ₹3,200 crore and net indirect taxes are negative ₹75 crore, what is NNP at market price?
Answer and explanation
Correct answer: ₹3,125 crore
In national-income accounting, national income is NNP at factor cost. To obtain NNP at market price, add net indirect taxes: NNP at market price = NNP at factor cost + NIT. Hence, ₹3,200 + (−₹75) = ₹3,125 crore. Option B is correct. Because NIT is negative, the market-price value is lower than factor cost; adding ₹75 instead would incorrectly produce option D.
Frequently asked questions
What is the correct answer to this question?
₹3,125 crore
Why is this the correct answer?
In national-income accounting, national income is NNP at factor cost. To obtain NNP at market price, add net indirect taxes: NNP at market price = NNP at factor cost + NIT. Hence, ₹3,200 + (−₹75) = ₹3,125 crore. Option B is correct. Because NIT is negative, the market-price value is lower than factor cost; adding ₹75 instead would incorrectly produce option D.
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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