Q13 of 25 Page 1

Which of the following affects national income? (Choose the correct alternative)

(a) Goods and Services tax


(b) Corporation tax


(c) Subsidies


(d) None of the above

(c) Subsidies

National income is the money value of the final goods and services that are produced within the territories of the country during a year. Subsidies are given by the government to reduce the cost of production of goods and services. Thus while calculating national income, the net indirect taxes are subtracted, while the subsidies are added.


NNPFC= NNPMP- Net indirect taxes+ Subsidies


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Explain the conditions of producer’s equilibrium in terms of marginal revenue and marginal cost.

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The central bank can increase the availability of credit by (Choose the correct alternative)

(a) Raising repo rate


(b) Raising reverse repo rate


(c) Buying government securities


(d) Selling government securities