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Adjusting for Inflation

The vegetable...

Question

The vegetables grown in kitchen gardening are final goods, yet their value is not considered in estimating national income. Why?

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Solution

Such transactions (termed as Non-Market Transactions) are not considered in estimating national income because it is difficult to ascertain their market value. Moreover, such transactions are not done for the purpose of earning income.

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Q. Answer in detail:

Explain the 'Final Good Approach' to avoid double counting of goods and services in the estimation of national income.

Q. State with reasons whether you agree or disagree with the following statements:

The money value of intermediate goods is not included in the estimation of national income.

Q. At the time of counting national income, value of which goods is considered?

Q. Give reason or explain the following statements:

1) Income from second hand sale of goods is excluded from national income.
2) National income at factor cost includes subsidy.
3) National income estimates are accurate in India.
4) Old age pension is transfer income.
5) Paid services are included in national income.

Q. Very Short Answer Type Questions:
Why are imports not included in the estimation of national income?

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