State with reasons whether you agree or disagree with the following st

1.	State with reasons whether you agree or disagree with the following statements:National Income at factor cost includes subsidy.
Answer» Yes, I agree with this statement. National Income at factor cost is the income earned by the factor owners (landlord, labourer, capitalist) in the course of contributing to the country’s output. NI(FC) = C + I + G + (X – M)+ (R – P) – Depreciation – Indirect Tax + Subsidies Subsidies is a negative tax. It is a sought of concession or discount given by the government to the consumers and producers. Subsidies are paid by the government to the firms / producers. Also the goods are sold at a price lower than their cost. Subsidies reduce the price of product below the factor cost. So to arrive at N.I. at factor cost we add subsidies.

State with reasons whether you agree or disagree with the following statements:National Income at factor cost includes subsidy.

Answer»

Yes, I agree with this statement.

National Income at factor cost is the income earned by the factor owners (landlord, labourer, capitalist) in the course of contributing to the country’s output.
NI(FC) = C + I + G + (X – M)+ (R – P) – Depreciation – Indirect Tax + Subsidies
Subsidies is a negative tax. It is a sought of concession or discount given by the government to the consumers and producers.
Subsidies are paid by the government to the firms / producers.
Also the goods are sold at a price lower than their cost.
Subsidies reduce the price of product below the factor cost. So to arrive at N.I. at factor cost we add subsidies.