Question : Statement 1: National income at factor cost is obtained by adding indirect taxes to the net national product.
Statement 2: Indirect taxes are taxes levied on the production and sale of goods and services.
Option 1: Statement 1 is true, and Statement 2 is false.
Option 2: Statement 1 is false, and Statement 2 is true.
Option 3: Both Statement 1 and Statement 2 are true.
Option 4: Both Statement 1 and Statement 2 are false.
Correct Answer: Statement 1 is true, and Statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and Statement 2 is false.
Statement 1 is true. National income at factor cost is obtained by adding indirect taxes to the net national product. It represents the income earned by the factors of production (such as labor and capital) in the economy.
Statement 2 is false. Indirect taxes are indeed taxes levied on the production and sale of goods and services. However, they are not added to the net national product to obtain national income at factor cost. Instead, indirect taxes are deducted from the gross national product (GNP) to arrive at the net national product (NNP).
Therefore, Statement 1 is true, and Statement 2 is false.
