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What is the key difference between NNP at Market Price and NNP at Factor Cost?
- a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.
- b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.
- c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.
- d)NNP at Market Price is always higher than NNP at Factor Cost.
Correct answer is option 'A'. Can you explain this answer?
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What is the key difference between NNP at Market Price and NNP at Fact...
Key Difference between NNP at Market Price and NNP at Factor Cost
Introduction:
NNP stands for Net National Product, which is a measure of the total economic output of a country. It represents the value of all final goods and services produced by the residents of a country in a given period of time, after deducting depreciation. NNP can be calculated at market price or factor cost, and the key difference between the two lies in the inclusion or exclusion of certain components.
1. Definition and Calculation:
- NNP at Market Price: It is calculated by adding indirect taxes to the GDP (Gross Domestic Product) at market price and subtracting subsidies.
- NNP at Factor Cost: It is calculated by deducting indirect taxes and adding subsidies to the GDP at factor cost.
2. Inclusion of Indirect Taxes and Subsidies:
- NNP at Market Price: This measure includes indirect taxes, such as sales tax, excise duty, and customs duty, which are levied on the sale and production of goods and services. It also deducts subsidies provided by the government to certain sectors or industries.
- NNP at Factor Cost: This measure excludes indirect taxes and includes subsidies, as it focuses on the income generated by the factors of production (land, labor, capital, and entrepreneurship).
3. Impact of Indirect Taxes and Subsidies:
- NNP at Market Price: The inclusion of indirect taxes in this measure reflects the impact of taxes on the final prices of goods and services. It provides a more comprehensive view of the economic output, as it considers the revenue collected by the government through taxes.
- NNP at Factor Cost: By excluding indirect taxes, this measure focuses on the income earned by the factors of production. It provides a clearer picture of the income generated within the country, without the influence of taxes.
4. Implications for Foreign Income:
- NNP at Market Price: This measure takes into account foreign income, such as exports and imports, as it considers the total market value of goods and services produced by the residents of a country, regardless of their location.
- NNP at Factor Cost: This measure does not consider foreign income, as it focuses on the income generated by the factors of production within the country's boundaries.
Conclusion:
The key difference between NNP at Market Price and NNP at Factor Cost lies in the inclusion or exclusion of indirect taxes and subsidies. NNP at Market Price includes indirect taxes and deducts subsidies, while NNP at Factor Cost excludes indirect taxes and includes subsidies. This difference affects the calculation of NNP and provides different perspectives on the economic output and income generated within a country.
Introduction:
NNP stands for Net National Product, which is a measure of the total economic output of a country. It represents the value of all final goods and services produced by the residents of a country in a given period of time, after deducting depreciation. NNP can be calculated at market price or factor cost, and the key difference between the two lies in the inclusion or exclusion of certain components.
1. Definition and Calculation:
- NNP at Market Price: It is calculated by adding indirect taxes to the GDP (Gross Domestic Product) at market price and subtracting subsidies.
- NNP at Factor Cost: It is calculated by deducting indirect taxes and adding subsidies to the GDP at factor cost.
2. Inclusion of Indirect Taxes and Subsidies:
- NNP at Market Price: This measure includes indirect taxes, such as sales tax, excise duty, and customs duty, which are levied on the sale and production of goods and services. It also deducts subsidies provided by the government to certain sectors or industries.
- NNP at Factor Cost: This measure excludes indirect taxes and includes subsidies, as it focuses on the income generated by the factors of production (land, labor, capital, and entrepreneurship).
3. Impact of Indirect Taxes and Subsidies:
- NNP at Market Price: The inclusion of indirect taxes in this measure reflects the impact of taxes on the final prices of goods and services. It provides a more comprehensive view of the economic output, as it considers the revenue collected by the government through taxes.
- NNP at Factor Cost: By excluding indirect taxes, this measure focuses on the income earned by the factors of production. It provides a clearer picture of the income generated within the country, without the influence of taxes.
4. Implications for Foreign Income:
- NNP at Market Price: This measure takes into account foreign income, such as exports and imports, as it considers the total market value of goods and services produced by the residents of a country, regardless of their location.
- NNP at Factor Cost: This measure does not consider foreign income, as it focuses on the income generated by the factors of production within the country's boundaries.
Conclusion:
The key difference between NNP at Market Price and NNP at Factor Cost lies in the inclusion or exclusion of indirect taxes and subsidies. NNP at Market Price includes indirect taxes and deducts subsidies, while NNP at Factor Cost excludes indirect taxes and includes subsidies. This difference affects the calculation of NNP and provides different perspectives on the economic output and income generated within a country.
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What is the key difference between NNP at Market Price and NNP at Fact...
The key difference is that NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.
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What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct answer is option 'A'. Can you explain this answer?
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What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct 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 What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct 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 What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct answer is option 'A'. Can you explain this answer?.
What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct 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 What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct 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 What is the key difference between NNP at Market Price and NNP at Factor Cost?a)NNP at Market Price includes indirect taxes, while NNP at Factor Cost excludes them.b)NNP at Market Price includes depreciation, while NNP at Factor Cost excludes it.c)NNP at Market Price considers foreign income, while NNP at Factor Cost does not.d)NNP at Market Price is always higher than NNP at Factor Cost.Correct answer is option 'A'. Can you explain this answer?.
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