2001 General Studies, all questions
UPSC Prelims 2001 · General Studies
Question 19: Economy and Social Development
The term National Income represents
aGross National Product at market prices minus depreciation
bGross National Product at market prices minus depreciation net factor income from abroad
cGross National Product at market prices minus depreciation and indirect taxes subsidies
dGross National Product at market prices minus net factor income from abroad
AnswerThe answer is (c).
National Income is Net National Product at factor cost. Start from Gross National Product at market prices, subtract depreciation to get Net National Product at market prices, then subtract indirect taxes and add subsidies to reach factor cost. So National Income equals GNP at market prices minus depreciation minus net indirect taxes (indirect taxes less subsidies).
Why each option is right or wrong
- (a) Stops at NNP at market prices, which still includes net indirect taxes.
- (b) Also removes net factor income from abroad, which gives a domestic rather than national measure, and still leaves taxes in.
- (c) Right: it removes depreciation and net indirect taxes, giving NNP at factor cost.
- (d) Removing net factor income from abroad from GNP gives GDP at market prices, not National Income.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2001, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.