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Match List-I with List-II

List-IList-II
(A) GDP_MP(I) NNP_FC + NIT
(B) GDP_FC(II) NNP_MP - NIT
(C) NNP_MP(III) GDP_FC + NIT
(D) NNP_FC(IV) GDP_MP - NIT

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 4

Option 4: (A) - (III), (B) - (IV), (C) - (I), (D) - (II) -> In national income accounting, the relationship between market prices (MP) and factor cost (FC) is bridged by Net Indirect Taxes (NIT = Indirect Taxes - Subsidies). The key formulas are:

• GDP_MP = GDP_FC + NIT (adding NIT converts FC to MP)

• GDP_FC = GDP_MP - NIT (subtracting NIT converts MP to FC)

• NNP_MP = NNP_FC + NIT (same logic applies to NNP)

• NNP_FC = NNP_MP - NIT

Therefore: (A) matches (III), (B) matches (IV), (C) matches (I), and (D) matches (II). Market prices include indirect taxes, while factor cost represents actual payments to factors of production. -> correct

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