Match List-I with List-II.
| List-I | List-II | ||
| (A) | GDP at factor cost | (I) | NDPMP - NIT |
| (B) | NDP at factor cost | (II) | NNPMP - NIT |
| (C) | National Income | (III) | GNPMP - NIT |
| (D) | GNP at factor cost | (IV) | GDPMP - NIT |
Choose the correct answer from the options given below :
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A)-(IV), (B)-(I), (C)-(II), (D)-(III)
Factor cost is the payment to the factors of production. To reach market price (MP), we add indirect taxes less subsidies. These are called net indirect taxes (NIT). So any aggregate at factor cost is the same aggregate at market price minus NIT.
| List-I | List-II | Reason |
|---|---|---|
| (A) GDP at factor cost | (IV) GDPMP - NIT | Gross domestic product stays gross and domestic. Only NIT is taken out. |
| (B) NDP at factor cost | (I) NDPMP - NIT | Net domestic product at market price, less NIT. |
| (C) National Income | (II) NNPMP - NIT | National income is net national product at factor cost. |
| (D) GNP at factor cost | (III) GNPMP - NIT | Gross national product at market price, less NIT. |
NCERT (2026-27): “2.3 Some Macroeconomic Identities …But market price includes indirect taxes. When indirect taxes are imposed on goods and services, their prices go up. Indirect taxes accrue to the government. We have to deduct them from NNP evaluated at market prices in order to calculate that part of NNP which actually accrues to the factors of production. Similarly, there may be subsidies granted by the government on the prices of some commodities (in India petrol is heavily taxed by the government, whereas cooking gas is subsidised). So we need to add subsidies to the NNP evaluated at market prices. The measure that we obtain by doing so is called Net National Product at factor cost or National Income. Thus, NNP at factor cost ≡ National Income (NI ) ≡ NNP at market prices – (Indirect taxes – Subsidies) ≡ NNP at market prices – Net indirect taxes (Net indirect taxes ≡ Indirect taxes – Subsidies)…”
Table 2.4: Basic National Income Aggregates
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