Question

From the following information, compute GNP at MP. GDP at FC = ₹3000 ; NFIA ₹2000 ; indirect tax ₹420 ; subsidies ₹240​

Answer 1

ANSWER :

• ❖ If GDP at FC is Rs. 3,000; NFIA is Rs. 2,000; Indirect Tax is Rs. 420 and Subsidies is Rs. 240; then GNP at MP will be Rs. 5,180.

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SOLUTION :

❒ Given :-

• GDP at FC = Rs. 3,000

• NFIA = Rs. 2,000

• Indirect Tax = Rs. 420

• Subsidies = Rs. 240

❒ To Compute :-

• GNP at MP = ?

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❒ Step 1 : Calculation of Net Indirect Tax :-

Here,

• Indirect Tax = Rs. 420

• Subsidies = Rs. 240

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: Net \: \: Indirect \: \: Tax = Indirect \: \: Tax - Subsidies \: }}}$

Substituting the values in the formula we get,

• ★ Net Indirect Tax = Indirect Tax - Subsidies

➜ Net Indirect Tax = Rs. 420 - Rs. 240

➜ Net Indirect Tax = Rs. 180

• So, the amount of Net Indirect Tax = Rs. 180.

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❒ Step 2 : Calculation of GDP at MP :-

Here,

• GDP at FC = Rs. 3,000

• Net Indirect Tax = Rs. 180

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: GDP \: \: at \: \: MP = GDP \: \: at \: \: FC + Net \: \: Indirect \: \: Tax \: }}}$

Substituting the values in the formula we get,

• ★ GDP at MP = GDP at FC + Net Indirect Tax

➜ GDP at MP = Rs. 3,000 + Rs. 180

➜ GDP at MP = Rs. 3,180

• So, the amount of GDP at MP = Rs. 3,180.

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❒ Step 3 : Calculation of GNP at MP :-

Here,

• GDP at MP = Rs. 3,180

• NFIA = Rs. 2,000

We know that,

• $\dag \: \: \underline{ \boxed{ \sf{ \: GNP \: \: at \: \: MP = GDP \: \: at \: \: MP + NFIA \: }}}$

Using this formula we get,

• ✪ GNP at MP = GDP at MP + NFIA

➨ GNP at MP = Rs. 3,180 + Rs. 2,000

∴ GNP at MP = Rs. 5,180

• Hence, the value of GNP at MP is Rs. 5,180.

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ABBREVIATIONS USED :

• ✎ GDP at FC ➛ Gross Domestic Product at Factor Cost

• ✎ GDP at MP ➛ Gross Domestic Product at Market Price

• ✎ GNP at MP ➛ Gross National Product at Market Price

• ✎ NFIA ➛ Net Factor Income from Abroad