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Cost of Goods Sold

Whether the f...

Question

Whether the following items will be included in National Income? Give reasons for your answer.
(i) Free meals to beggars.
(ii) Wages received by an Indian working in British Embassy.
(iii) Medical facilities to government employees.
(iv) Purchase of vegetables by a restaurant.
(v) Government Expenditure on street light.

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Solution

(i) No, it is a transfer payment.
(ii) Yes, it is a factor income from abroad.
(iii) Yes, it is a part of Government final consumption expenditure.
(iv) No, it is a part of intermediate consumption expenditure.
(v) Yes, it is a part of Government final consumption expenditure.

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