Multiple Choice Questions on Whenever there is a recession in the economy the gap between GDP at factor cost and GDP at market pr........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

Whenever there is a recession in the economy the gap between GDP at factor cost and GDP at market pr...........

Economic Affairs Growth and Indicators
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    Whenever there is a recession in the economy, the gap between GDP at factor cost and GDP at market price tends to decrease. Which of the following is the most suitable explanation for the above?

    In times of recession, the growth of direct taxes tends to fall and the expenditure on subsidies also reduces

    Incorrect Answer

    In times of recession, the growth of indirect taxes tends to fall while the expenditure on subsidies increases

    Correct Answer

    In time of recession, the factor cost goes up on account of increase in interest payments

    Incorrect Answer

    In times of recession, the tax income remains almost the same while the expenditure on subsidies increases

    Incorrect Answer
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    Explanation:

    2nd option is correct i.e. In times of recession, the growth of indirect taxes tends to fall while the expenditure on subsidies increases

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