Home Indian Economy MCQs

Question

Which of the following is the correct formula for calculating GDP at market price?

  1. GDP at factor cost + Indirect Taxes - Subsidies
  2. GDP at factor cost - Indirect Taxes + Subsidies
  3. GDP at factor cost + Direct Taxes - Subsidies
  4. GDP at factor cost - Direct Taxes + Subsidies

Answer:

Option A: GDP at factor cost + Indirect Taxes - Subsidies

Detailed Solution:

The correct answer is “GDP at factor cost + Indirect Taxes - Subsidies”.

GDP at market price includes indirect taxes and excludes subsidies, which are not included in the factor cost.