Assertion (A): GST is subtracted when converting GDP at market price to GDP at factor cost.
Reason (R): GST is an indirect tax that is included in market prices but is not earned by any factor of production.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Factor cost counts only what factors earn, so the tax part of the price is removed. R explains A.

Concept: Indirect taxes and factor cost
Typical timeTypical: 40 s
Your timeYours: —

The rule this testsMarket price, factor cost and basic prices

Practise this chapter →

Ten questions from National Income Aggregates & GDP, at your own pace.

Assertion (A): GST is subtracted when converting GDP at market price to GDP at factor cost.Reason (R): GST is an indirect tax that is included in market prices but is not earned by any factor of production.

Explanation

Assertion (A): GST is subtracted when converting GDP at market price to GDP at factor cost.
Reason (R): GST is an indirect tax that is included in market prices but is not earned by any factor of production.