CIMA BA1 · Chapter 1 · Question 5 of 10
GDP at market prices is $900bn. Indirect taxes are $120bn and subsidies are $30bn. What is GDP at basic prices (factor cost)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $810bn
Explanation
Market prices include indirect taxes and are reduced by subsidies. To convert to factor cost, remove taxes and add back subsidies: 900 - 120 + 30 = $810bn.
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