question_answer

How should the following be treated while estimating National Income? Give reasons.

(i) Expenditure on education of children by a family.

(ii) Payment of electricity bill by a school.

Answer:

(i) Expenditure on education of children by a family is a final consumption expenditure of households because it is a payment for the services rendered by the school. It will be included.

(ii) Payment of electricity by a school is intermediate cost of the school and therefore is used for finding out value added and not directly included in the estimation of national income.