Question

Ananya makes the following transactions. Discuss the impact of each transaction on the National Income of the country.
(i) She sells her car for Rs. 80,000.
(ii) She pays Rs. 5,000 as commission to the broker on sale of car.
(iii) She imports an Apple I-pod for Rs. 7,000.
(iv) She buys a new car for Rs. 9,00,000.
(v) She purchases an antique painting for Rs. 4,500.
(vi) She purchased shares of Reliance Industries for Rs. 12,000.
(vii) She pays interest of Rs. 2,000 on loan taken from ICICI to buy the new car.

Answer 1

(i) No impact as transactions of second hand goods are not part of National Income.
(ii) Yes, this amount will be included in National as it is the income of broker for his productive services.
(iii) National Income will be less by this amount of import.
(iv) Yes, it will be included as it is a part of private final consumption expenditure.
(v) No impact as it is not a transaction involving goods produced in the current year.
(vi) No impact as it involves a change of title only and does not contribute to any productive activity.
(vii) No impact as it is a non-factor payment because the loan is not used for production but for consumption.