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WAEC Economics 2020 Question 33

Question 33

National Income

How is NNP at factor cost derived from GNP at market prices?

  1. A.GNP − Depreciation + Indirect taxes + Subsidies
  2. B.GNP − Depreciation − Indirect taxes + Subsidies
  3. C.GNP + Depreciation + Indirect taxes − Subsidies
  4. D.GNP + Depreciation − Indirect taxes + Subsidies
Show the answer and explanation

Answer: B (GNP − Depreciation − Indirect taxes + Subsidies)

Explanation

Subtract depreciation to get NNP, then remove indirect taxes and add subsidies to change market prices to factor cost.