Match List-I with List-IIList-IList-II(A).Gross Domestic Product at M…

Match List-I with List-II

List-I		List-II
(A).	Gross Domestic Product at Market Prices (GDP_MP)	(I).	\( C+I+G+(X-M) \)
(B).	Gross Domestic Product at Factor Cost (GDP_FC)	(II).	GDP_MP - Depreciation
(C).	Net Domestic Product at Market Prices (NDP_MP)	(III).	GDP_MP - Net Product Taxes
(D).	Net Domestic Product at Factor Cost (NDP_FC)	(IV).	NDP_MP - Net Product Taxes - Net Production Taxes

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → (A)-(I), (B)-(III), (C)-(II), (D)-(IV)

Domestic product can be valued in two ways. At market prices it is what buyers pay, so it includes taxes on products less subsidies. At factor cost it is what producers receive, with those taxes taken out. A gross measure includes depreciation (the capital used up in the year); a net measure leaves it out.

List-I	List-II	Reason
(A) Gross Domestic Product at Market Prices (GDP_MP)	(I) \( C+I+G+(X-M) \)	GDP is the market value of all final goods and services made in the country in a year. By spending, it is consumption + investment + government spending + net exports.
(B) Gross Domestic Product at Factor Cost (GDP_FC)	(III) GDP_MP - Net Product Taxes	Taking net product taxes out of GDP at market prices gives the value received by producers.
(C) Net Domestic Product at Market Prices (NDP_MP)	(II) GDP_MP - Depreciation	Taking depreciation out of GDP at market prices gives the net product at market prices.
(D) Net Domestic Product at Factor Cost (NDP_FC)	(IV) NDP_MP - Net Product Taxes - Net Production Taxes	NDP at factor cost is the income earned by the factors (wages, profits, rent, interest). So both taxes, product and production, are taken out of NDP at market prices.

Note: Item (III) is the short form given in the NCERT table for GDP at factor cost, so the match (B)-(III) follows the book. Strictly, factor cost has no tax at all, as (IV) shows by taking out both taxes.

NCERT (2026-27): Introductory Macroeconomics — Chapter 2: National Income Accounting

NCERT extract

NCERT (2026-27): “2.2.4 Factor Cost, Basic Prices and Market Prices …Factor cost includes only the payment to factors of production, it does not include any tax. In order to arrive at the market prices, we have to add to the factor cost the total indirect taxes less total subsidies. The basic prices lie in between: they include the production taxes (less production subsidies) but not product taxes (less product subsidies).…”