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Gross value added (GVA) at basic prices
- a)Includes production taxes and excludes production subsidies
- b)Includes product taxes and excludes product subsidies
- c)Includes only production taxes and product taxes
- d)Includes only production subsides and product subsidies
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Gross value added (GVA) at basic pricesa)Includes production taxes and...
GVA at basic prices = factor cost + (Production taxes - Production subsidies)
Examples of production taxes are land revenues, stamps and registration fees and tax on profession. Examples of production subsidies include, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc Some examples of product taxes are excise tax, sales tax, service tax and import and export duties. Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc.
Examples of production taxes are land revenues, stamps and registration fees and tax on profession. Examples of production subsidies include, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc Some examples of product taxes are excise tax, sales tax, service tax and import and export duties. Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc.
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Gross value added (GVA) at basic pricesa)Includes production taxes and...
Gross value added (GVA) at basic prices
The correct answer is option 'A', which states that GVA at basic prices includes production taxes and excludes production subsidies.
Explanation:
Gross value added (GVA) is a measure of economic activity that represents the value of goods and services produced in an economy minus the value of inputs and raw materials used in the production process. It is often used as an indicator of the overall economic performance of a country or region.
GVA at basic prices refers to the value of goods and services produced by an industry or sector at the basic prices before any taxes or subsidies are applied. It is an important measure because it provides a clear picture of the actual value generated by an industry or sector without the distortion caused by taxes or subsidies.
Includes production taxes:
Production taxes are taxes levied on the production of goods and services, such as excise taxes or value-added taxes. These taxes are included in GVA at basic prices because they are considered part of the production cost and reduce the value generated by an industry or sector. By including production taxes, GVA at basic prices provides a more accurate measure of the actual economic value produced.
Excludes production subsidies:
Production subsidies, on the other hand, are government payments or incentives provided to industries or sectors to support their production activities. These subsidies are not included in GVA at basic prices because they artificially increase the value generated by an industry or sector. Excluding production subsidies ensures that GVA at basic prices reflects the actual economic value produced without any distortions caused by government support.
Conclusion:
In summary, GVA at basic prices includes production taxes and excludes production subsidies. This ensures that the measure accurately represents the value of goods and services produced by an industry or sector without any distortions caused by taxes or subsidies.
The correct answer is option 'A', which states that GVA at basic prices includes production taxes and excludes production subsidies.
Explanation:
Gross value added (GVA) is a measure of economic activity that represents the value of goods and services produced in an economy minus the value of inputs and raw materials used in the production process. It is often used as an indicator of the overall economic performance of a country or region.
GVA at basic prices refers to the value of goods and services produced by an industry or sector at the basic prices before any taxes or subsidies are applied. It is an important measure because it provides a clear picture of the actual value generated by an industry or sector without the distortion caused by taxes or subsidies.
Includes production taxes:
Production taxes are taxes levied on the production of goods and services, such as excise taxes or value-added taxes. These taxes are included in GVA at basic prices because they are considered part of the production cost and reduce the value generated by an industry or sector. By including production taxes, GVA at basic prices provides a more accurate measure of the actual economic value produced.
Excludes production subsidies:
Production subsidies, on the other hand, are government payments or incentives provided to industries or sectors to support their production activities. These subsidies are not included in GVA at basic prices because they artificially increase the value generated by an industry or sector. Excluding production subsidies ensures that GVA at basic prices reflects the actual economic value produced without any distortions caused by government support.
Conclusion:
In summary, GVA at basic prices includes production taxes and excludes production subsidies. This ensures that the measure accurately represents the value of goods and services produced by an industry or sector without any distortions caused by taxes or subsidies.
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Gross value added (GVA) at basic pricesa)Includes production taxes and excludes production subsidiesb)Includes product taxes and excludes product subsidiesc)Includes only production taxes and product taxesd)Includes only production subsides and product subsidiesCorrect answer is option 'A'. Can you explain this answer?
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