CA Foundation · Business Economics · Determination of National Income
In a country, Gross Domestic Product at market prices (GDP at MP) is ₹900 crore, depreciation is ₹60 crore, net factor income from abroad is ₹20 crore, and net indirect taxes (indirect taxes minus subsidies) are ₹80 crore. What is the Net National Product at factor cost (NNP at FC)?
NNP at factor cost is ₹780 crore. Add net factor income from abroad to GDP to get GNP of ₹920 crore, subtract depreciation to get NNP at market price of ₹860 crore, then subtract net indirect taxes of ₹80 crore to reach factor cost.
- A₹780 croreCorrect
- B₹800 crore
- C₹860 crore
- D₹740 crore
Explanation
GNP at MP = 900 + 20 = ₹920 crore. NNP at MP = 920 − 60 = ₹860 crore. NNP at FC = NNP at MP − net indirect taxes = 860 − 80 = ₹780 crore. The option ₹860 crore is wrong because it does not remove net indirect taxes.
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