Question

There is no difference between GDP at market price and GDP at factor cost in a two sector economy including household sector and producer sector.

• A. True
• B. False

Answer 1

The correct option is A

True

Difference between GDP at market price and GDP at factor cost is the net indirect taxes.

Net indirect taxes = Indirect taxes - Subsidies

The parameters of tax and subsidies emerge only when we are considering a three sector economy including households, producers and the government.