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Consider the following statements regarding Value Added Method of estimating national income:
1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.
2. GVA at factor cost does not include any taxes.
Q. Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements regarding Value Added Method of est...
Explanation:
The Value Added Method is one of the methods used to estimate national income. It calculates the value added by each sector or industry to the economy. The Gross Value Added (GVA) at basic prices is the value added by each sector or industry before accounting for taxes and subsidies. On the other hand, GVA at factor cost is the value added by each sector or industry after accounting for taxes but excluding subsidies.
Statement 1: Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.
- This statement is correct. GVA at basic prices includes production taxes, which are taxes levied on the production of goods and services, such as sales taxes or excise duties. However, it excludes production subsidies, which are financial incentives provided by the government to promote the production of certain goods or services.
Statement 2: GVA at factor cost does not include any taxes.
- This statement is also correct. GVA at factor cost is the value added by each sector or industry after accounting for taxes. It excludes taxes such as sales taxes or excise duties. This is because GVA at factor cost focuses on the income received by factors of production, such as labor or capital, and taxes are not considered as income for these factors.
Conclusion:
Both statement 1 and statement 2 are correct. GVA at basic prices includes production taxes and excludes production subsidies, while GVA at factor cost excludes taxes. Therefore, option C, "Both 1 and 2," is the correct answer.
The Value Added Method is one of the methods used to estimate national income. It calculates the value added by each sector or industry to the economy. The Gross Value Added (GVA) at basic prices is the value added by each sector or industry before accounting for taxes and subsidies. On the other hand, GVA at factor cost is the value added by each sector or industry after accounting for taxes but excluding subsidies.
Statement 1: Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.
- This statement is correct. GVA at basic prices includes production taxes, which are taxes levied on the production of goods and services, such as sales taxes or excise duties. However, it excludes production subsidies, which are financial incentives provided by the government to promote the production of certain goods or services.
Statement 2: GVA at factor cost does not include any taxes.
- This statement is also correct. GVA at factor cost is the value added by each sector or industry after accounting for taxes. It excludes taxes such as sales taxes or excise duties. This is because GVA at factor cost focuses on the income received by factors of production, such as labor or capital, and taxes are not considered as income for these factors.
Conclusion:
Both statement 1 and statement 2 are correct. GVA at basic prices includes production taxes and excludes production subsidies, while GVA at factor cost excludes taxes. Therefore, option C, "Both 1 and 2," is the correct answer.
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Community Answer
Consider the following statements regarding Value Added Method of est...
Gross value added is the output of the country less the intermediate consumption, which is the difference between gross output and net output.
GVA at basic prices includes production taxes and exclude production subsidies available on the commodity. On the other hand, GVA at factor cost includes subsidies and excludes indirect taxes.
GVA at Factor Cost:
- Include Subsidies
- Exclude Indirect Taxes
GVA at Basic Price (i.e. Market Price):
- Exclude Production Subsidies
- Include Production Taxes
So, both statements 1 and 2 are correct.
Therefore, the correct answer is (c).
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Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?
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Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Value Added Method of estimating national income:1. Gross Value Added (GVA) at basic prices includes production taxes and excludes production subsidies available on the commodity.2. GVA at factor cost does not include any taxes.Q. Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.
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