If NDP at market price (NDP_MP) is ₹1000 crore, NFIA is ₹40 crore, and net indirect taxes (NIT) are −₹20 crore, what is NNP at factor cost (NNP_FC)?
Answer and explanation
Correct answer: ₹1060 crore
To convert NDP at market price into NNP at factor cost, first add NFIA to convert the domestic aggregate into a national aggregate, and then subtract net indirect taxes to convert market prices into factor cost. Thus, NNP_FC = NDP_MP + NFIA − NIT = 1000 + 40 − (−20) = 1060 crore. Since NIT is negative, subtracting it increases the result by ₹20 crore. Therefore, option A is correct.
Frequently asked questions
What is the correct answer to this question?
₹1060 crore
Why is this the correct answer?
To convert NDP at market price into NNP at factor cost, first add NFIA to convert the domestic aggregate into a national aggregate, and then subtract net indirect taxes to convert market prices into factor cost. Thus, NNP_FC = NDP_MP + NFIA − NIT = 1000 + 40 − (−20) = 1060 crore. Since NIT is negative, subtracting it increases the result by ₹20 crore. Therefore, option A is correct.
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 - NNP.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
