_____ accounts for the difference between the concept of market price and factor cost in national income measurement.
Net indirect taxes
In national income accounting, the difference between market price and factor cost arises due to the presence of net indirect taxes. The formula used is:
Market Price = Factor Cost + Indirect Taxes - Subsidies
- Indirect taxes (e.g., GST, excise duty, VAT) increase the price of goods and services.
- Subsidies (e.g., government grants, fuel subsidies) reduce the market price of goods and services.
- Net Indirect Taxes = Indirect Taxes - Subsidies.
Thus, net indirect taxes account for the difference between market price and factor cost.
Important Questions from Economy
The Five Year Plan was first launched in
Which of the following was/were the feature(s) of Lenin’s New Economic Policy (NEP) for the Soviet Union?
1) Private retail trading was strictly forbidden
2) Private enterprise was strictly forbidden
3) Peasants were not allowed to sell their surplus
4) To secure liquid capital, concessions were allowed to foreign capitalists, but the State retained the option of purchasing the product of such concerns
Select the correct answer using the code given below:
Which one of the following was set as a target of average growth of GDP of India over the plan period 2012-2017 by the Approach Paper to the Twelfth Five year Plan?
In ________ economies, all productive resources are owned and controlled by the government.
Private ownership of the means of production is a feature of a _______ economy.
