Question

Manish buys a second hand car from a car broker for Rs. 3,25,000. The broker receives Rs. 16,500 as commission for his services from Manish. How will this transaction affect the national income of the country? Give reason for your answer.

Answer 1

The commission of Rs. 16,500 received by broker will be added in the national income of the country as it is the income of broker for his productive services to Manish. The amount paid for purchase of car will not be included as it is the payment for purchase of an already existing object and there is no addition to current flow of goods and services.