Question

Precautions regarding income method ( macroeconomics ) chapter 3

Answer 1

Dear Student,
Following are the precaution of income method:
1. Transfer earning like unemployment allowances, charity, old age pension, etc are not included in national included because of such receipts do not correspond to flow of good and services.
2. Income from the sale of second-hand goods will not be included in national income as its already been included.
3. Income of sale of shares and bonds are not included because they do not contribute to the production of goods and services.
4. Gains from lotteries, horse race, etc are not included.
5. Illegal incomes are not included, indirect taxes are not included.
So above precautions to be considered.

Regards,

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