Question

India's domestic product at market price is smaller than The domestic product at Factor cost . what does it imply . Suggest some measures to overcome the problem

Answer 1

Answer:

There exists subsidies

Explanation:

Domestic product at market price = domestic product at factor cost + taxes - subsidies.

Hence, the economy involves some amount of subsidies which is bringing down the GDP at market price.

Measures to correct this would involve reduction in savings or increase in taxes, which would increase the value of Final Goods and services in the economy