Which of the following is added in the estimation of national income?
Which of the following is added in the estimation of national income?
Solution
Option 1 -> Payment of interest by an individual to a bank is a transfer payment, not included in national income as it doesn't represent production of goods/services.
Option 2 -> Bonus paid to employees is a factor income (compensation to employees) and represents payment for productive services, hence included in national income.
Option 3 -> National debt interest is a transfer payment by government on past borrowings, not a payment for current productive services, excluded from national income.
Option 4 -> Corporate tax payment is a transfer to government, not included separately in national income (though pre-tax profits are included).
Hence, Option 2: Bonus paid to employees -> Bonuses are part of employee compensation and represent factor income for labor services rendered. National income includes all factor incomes (wages, rent, interest, profits) earned from productive activities. Since bonuses are compensation for productive services, they are added in the estimation of national income under "Compensation of Employees" category-> correct
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