Economics · National Income Accounting
In an economy, indirect taxes are increased while subsidies are reduced by an equal amount. Assuming no change in real output, factor incomes, or depreciation, which of the following outcomes is most likely?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1National Income increases while GDP at market prices remains unchanged
- 2GDP at factor cost increases while GDP at market prices remains unchanged
- 3GDP at market prices increases while National Income remains unchanged✓
- 4GDP at market prices and National Income both increase
Correct answer
GDP at market prices increases while National Income remains unchanged
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