question_answer

How should the following be treated in estimating national income of a country? You must give reasons for your answer.

(i) Taking care of aged parents

(ii) Payment of corporate tax

(iii) Expenditure on providing police services by the government

Answer:

(i) Taking care of aged parents: This will not be included in national income as it does not involve any production of goods and services. Moreover, these services that are meant for self-consumption and it is difficult to estimate the market value of such services.

(ii) Payment of corporate tax: Corporate tax is a part of corporate profit and therefore, it is included in national income of the country.

(iii) Expenditure on providing police services by the government: It is included in national income of a country as it forms a part of Government Final Consumption Expenditure.