Question

Q. Which of the following statements with reference to the National Income Accounting is/are correct?

Select the correct answer using the code given below:

• A. 1 only
• B. 2 only
• C. Both 1 and 2
• D. Neither 1 nor 2

Answer 1

The correct option is A 1 only

Explanation:

GVA at basic prices will include production taxes and exclude production subsidies available on the commodity. GVA at factor cost includes no taxes and excludes no subsidies. GDP at market prices includes both production and product taxes and excludes both production and product subsidies.

Statement 1 is correct: GVA at Basic Price = GVA at Factor cost + (Production taxes – Production Subsidies)

Statement 2 is incorrect: GDP at market prices includes both production and product taxes and excludes both production and product subsidies.

• GDP at market price = GVA at basic Price + (Product Taxes – Product Subsidies).
• So GDP at market price= GVA at Factor cost + (Production taxes – Production Subsidies) + (Product Taxes – Product Subsidies).