According to the table of basic national income aggregates, GNP at factor cost is equal to:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → GNP at market prices − Net product taxes − Net production taxes
Going from market prices to factor cost removes the taxes on products and on production. So GNPFC = GNPMP − net product taxes − net production taxes.
Option (1) GNP at market prices + Net product taxes + Net production taxes — Incorrect. The taxes are subtracted to reach factor cost, not added.
Option (2) GNP at market prices − Net product taxes − Net production taxes — Correct. Factor cost = market prices minus net product and net production taxes.
Option (3) GNP at market prices − Depreciation — Incorrect. GNPMP − depreciation is NNPMP.
Option (4) GDP at factor cost − Net factor income from abroad — Incorrect. GDPFC + NFIA gives GNPFC; NFIA is added, not subtracted.
NCERT (2026-27): “Table 2.4: Basic National Income Aggregates … The term factor cost refers to the prices of products as received by the producers. Thus, factor cost is equal to market prices, minus net indirect taxes. …” “Table 2.4: Basic National Income Aggregates GNP at factor cost measures value of output received by the factors of production belonging to a country in a year.” |