Multiple choice

Which of the following is/are correct?

  1. GDP at market price = GDP at factor cost plus net indirect taxes

  2. NNP at factor cost = GNP at market price

  3. GNP at market price = NNP at market price plus net income from abroad

  4. All of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GDP at market price equals GDP at factor cost plus net indirect taxes (indirect taxes minus subsidies). This is because market prices include indirect taxes paid to the government, while factor costs represent actual payments to factors of production. Option B is incorrect because NNP at factor cost = GNP at market price - depreciation - net indirect taxes. Option C is incorrect because GNP at market price = NNP at market price + depreciation.

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