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Consider the following statements about GDP at market cost
1. GDP at market cost will increase if the government increases indirect taxes on goods and services.
2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.
3. GDP at market cost will be constant irrespective of changes in indirect tax rates.
Identify the correct answer from the options given below:
1. GDP at market cost will increase if the government increases indirect taxes on goods and services.
2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.
3. GDP at market cost will be constant irrespective of changes in indirect tax rates.
Identify the correct answer from the options given below:
- a)1 only
- b)2 only
- c)All of the above
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Consider the following statements about GDP at market cost1. GDP at ma...
GDP at Market cost = Factor cost + indirect taxes – Subsidies.
If the factor cost of product ‘xyz’ is Rs 200 and indirect taxes is Rs 20 and subsidy given by the government to reduce its price is Rs 10, than .The market cost of ‘xyz’ will be 200 + 20 – 10 = 210 Rs.
So, GDP at market increases if indirect taxes increase.
If the factor cost of product ‘xyz’ is Rs 200 and indirect taxes is Rs 20 and subsidy given by the government to reduce its price is Rs 10, than .The market cost of ‘xyz’ will be 200 + 20 – 10 = 210 Rs.
So, GDP at market increases if indirect taxes increase.
Most Upvoted Answer
Consider the following statements about GDP at market cost1. GDP at ma...
GDP at Market Cost and Indirect Taxes
Gross Domestic Product (GDP) is the total value of goods and services produced within the domestic territory of a country during a particular period of time. GDP at market cost is one of the ways of calculating GDP. It takes into account all the final goods and services produced in the economy and sold at market prices during a particular period.
Impact of Indirect Taxes on GDP at Market Cost
Indirect taxes are taxes that are levied on goods and services. These taxes are paid by the consumers while purchasing the goods and services. The impact of changes in indirect taxes on GDP at market cost is as follows:
1. Increase in Indirect Taxes: If the government increases indirect taxes on goods and services, the prices of goods and services will increase. The consumers will have to pay more to purchase the same goods and services. This will lead to a decrease in the demand for goods and services. As a result, the production of goods and services will decrease. This will lead to a decrease in GDP at market cost.
2. Decrease in Indirect Taxes: If the government decreases indirect taxes on goods and services, the prices of goods and services will decrease. The consumers will have to pay less to purchase the same goods and services. This will lead to an increase in the demand for goods and services. As a result, the production of goods and services will increase. This will lead to an increase in GDP at market cost.
3. Constant Indirect Tax Rates: If the government does not change the indirect tax rates, then GDP at market cost will remain constant.
Conclusion
Thus, it can be concluded that GDP at market cost is directly impacted by changes in indirect tax rates. An increase in indirect taxes will lead to a decrease in GDP at market cost, while a decrease in indirect taxes will lead to an increase in GDP at market cost.
Gross Domestic Product (GDP) is the total value of goods and services produced within the domestic territory of a country during a particular period of time. GDP at market cost is one of the ways of calculating GDP. It takes into account all the final goods and services produced in the economy and sold at market prices during a particular period.
Impact of Indirect Taxes on GDP at Market Cost
Indirect taxes are taxes that are levied on goods and services. These taxes are paid by the consumers while purchasing the goods and services. The impact of changes in indirect taxes on GDP at market cost is as follows:
1. Increase in Indirect Taxes: If the government increases indirect taxes on goods and services, the prices of goods and services will increase. The consumers will have to pay more to purchase the same goods and services. This will lead to a decrease in the demand for goods and services. As a result, the production of goods and services will decrease. This will lead to a decrease in GDP at market cost.
2. Decrease in Indirect Taxes: If the government decreases indirect taxes on goods and services, the prices of goods and services will decrease. The consumers will have to pay less to purchase the same goods and services. This will lead to an increase in the demand for goods and services. As a result, the production of goods and services will increase. This will lead to an increase in GDP at market cost.
3. Constant Indirect Tax Rates: If the government does not change the indirect tax rates, then GDP at market cost will remain constant.
Conclusion
Thus, it can be concluded that GDP at market cost is directly impacted by changes in indirect tax rates. An increase in indirect taxes will lead to a decrease in GDP at market cost, while a decrease in indirect taxes will lead to an increase in GDP at market cost.
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Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements about GDP at market cost1. GDP at market cost will increase if the government increases indirect taxes on goods and services.2. GDP at market cost will increase if the government decreases indirect taxes on goods and services.3. GDP at market cost will be constant irrespective of changes in indirect tax rates.Identify the correct answer from the options given below:a)1 onlyb)2 onlyc)All of the aboved)None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
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