GNP at market price is measured as:
- A.GDP at market price − Depreciation
- B.GNP at market price + subsidies
- C.GDP at market price + Net factor income from abroad
- D.NDP at factor cost + Net factor income from abroad
Correct answer
Explanation
The correct answer is C, GDP at market price + Net factor income from abroad. GDP counts everything produced within the country's borders, whoever produces it. GNP counts what is produced by the country's own normal residents, wherever they work. So to move from GDP to GNP, we add the income our residents earn abroad and subtract what foreigners earn in India; this net figure is called net factor income from abroad (NFIA). If NFIA is negative, GNP is smaller than GDP. Option A is wrong because GDP at market price minus depreciation gives NDP at market price, not GNP. Option B is wrong because it uses GNP to define itself, and adding subsidies is a step used to move from market price to factor cost, not to find GNP. Option D is wrong because NDP at factor cost plus NFIA gives NNP at factor cost, which is the national income. Exam tip: domestic to national, add NFIA; gross to net, subtract depreciation; market price to factor cost, subtract indirect taxes and add subsidies.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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