CSEET · Economic and Business Environment · National Income Accounting and Related Concepts
In a year, an economy has NNP at market prices of Rs 900 crore, indirect taxes of Rs 130 crore and subsidies of Rs 30 crore. What is its National Income (NNP at factor cost)?
National Income is Rs 800 crore. Net indirect taxes are indirect taxes minus subsidies, which is Rs 100 crore. Subtracting this from NNP at market prices of Rs 900 crore converts the measure to factor cost, giving Rs 800 crore.
- ARs 800 croreCorrect
- BRs 1,000 crore
- CRs 1,060 crore
- DRs 740 crore
Explanation
Net indirect taxes = 130 - 30 = Rs 100 crore. National Income = NNP at MP - net indirect taxes = 900 - 100 = Rs 800 crore. Rs 1,000 crore results from wrongly adding net indirect taxes, and Rs 740 crore from deducting 130 and adding 30 wrongly reversed.
Did you get it right without looking?
One question tells you little. A timed set on National Income Accounting and Related Concepts shows your real accuracy, how long you take and where you lose marks.
More National Income Accounting and Related Concepts questions
- Which of the following is treated as a leakage from the circular flow of income in an open economy with a government?
- The circular flow of income shows that, for an economy in a given period, the value of national output, national income and national expendi…
- Which of the following is a recognised use of national income statistics?
- Why does the production of goods in the underground or black economy limit the accuracy of national income estimates?
- In a four-sector circular flow model, which pair correctly lists an injection and a leakage associated with the foreign sector?
- In national income accounting, which of the following is treated as a 'flow' variable rather than a 'stock' variable?