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Expenditures

Whether the f...

Question

Whether the following items will be included in National Income? Give reasons for your answer.
(i) Financial help to flood victims.
(ii) Payment of telephone bill.
(iii) Employers' contribution to Provident Fund.
(iv) Rent received by an Indian from Building rented to Chinese Embassy.
(v) Free meals to employees.

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Solution

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

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