How should the following be treated in estimating national income of a

1.	How should the following be treated in estimating national income of a country ?(i) Taking care of aged parents(ii) Payment of corporate tax(iii) Expenditure on providing police services by the government
Answer» (i) This will not be included in national income as it does not involve any production of goods and services. (ii) It should not be included in the estimation of national income because it is a transfer payment by the firm. It is paid by out of income and therefore it is not to be separately added in the national income. (iii) It should be included because expenditure incurred by the government is a part of government’s final consumption expenditure.

How should the following be treated in estimating national income of a country ?(i) Taking care of aged parents(ii) Payment of corporate tax(iii) Expenditure on providing police services by the government

Answer»

(i) This will not be included in national income as it does not involve any production of goods and services.

(ii) It should not be included in the estimation of national income because it is a transfer payment by the firm. It is paid by out of income and therefore it is not to be separately added in the national income.

(iii) It should be included because expenditure incurred by the government is a part of government’s final consumption expenditure.

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How should the following be treated in estimating national income of a country ?(i) Taking care of aged parents(ii) Payment of corporate tax(iii) Expenditure on providing police services by the government

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