SSC Economics Sample Paper NCERT Sample Paper-6

  • question_answer
    If indirect taxes in an economy are increased, then which of the following can occur?
    1. GDP at factor cost increases
    2. GDP at factor cost decreases
    3. GDP at market price increases
    4. GDP at market price decreases
    Select the correct answer using the codes given below.

    A)  1 only 

    B)  2 and 3 only

    C)  3 only 

    D)  4 only

    Correct Answer: C

    Solution :

    [c] 3 only. GDP (market price) = GDP (factor cost) + indirect taxes \[-\] subsidies. This equation makes it clear that any increase in indirect taxes will increase the GDP at market prices.

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