Use the following information given to answer this question Total of all expenditure incurred during the year…

Analyze the question: We are given total expenditure (GDP at market prices), indirect taxes, and capital consumption (depreciation). We need National Income.

Concept:

• Total expenditure = GDP at market price
• GDP at factor cost = GDP at market price − indirect taxes (net of subsidies)
• Net National Product (National Income) = GDP at factor cost − capital consumption (depreciation)

(Strictly, National Income would also include net income from abroad, but none is given, so we ignore it.)

Solution:

1. GDP at market price = ₤80,000m
2. Subtract indirect taxes: 80,000 − 8,000 = ₤72,000m (GDP at factor cost)
3. Subtract capital consumption: 72,000 − 6,000 = ₤66,000m

National Income = ₤66,000m

Answer: B (₤66,000m)

Tip: Remember the chain: Expenditure → minus indirect taxes → minus depreciation → National Income. Taxes and capital consumption are the two "deductions" that take you from market-price GDP to national income. Option A (74,000) comes from subtracting only one deduction, which is a common trap, so always subtract both.