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The GDP at factor cost is the total value of all goods and services produced in a country during a given year. This figure excludes indirect taxes and subsidies.
Indirect taxes are those levied on goods and services that are not directly paid by the buyers or consumers.
They include, for example, sales tax, excise duty, and value–added tax. Subsidies are payments made by the government to support certain economic activities or sectors.
So, the GDP at factor cost gives a more accurate picture of the actual value of all goods and services produced in a country.
It is important to note that this figure does not include the net earnings of foreign residents operating in the country.
Explanation:
GDP at factor cost = value of the final goods and services produced within the domestic territory of a country during one year by all production units inclusive of depreciation. GDP at market price = GDP at factor cost + net indirect taxes(indirect taxes- subsidies)
GDP at factor cost is the total value of all goods and services produced in a country during a given year. It excludes indirect taxes and subsidies. So, option A is the correct answer.