Practicing Success
Which of the following will be included while estimating Gross Domestic Product at market price $(GDP_{MP})$ (A) Profit earned by American express Bank from its Branch in India (B) Dividends paid to shareholders of firm situated in Kerala (C) Donations made to a religious institution (D) Salary paid to an Indian working in Japanese Embassy (E) Purchase of taxi by Travel Services company Choose the correct answer from the options given below : |
(A), (B) and (C) only (A), (B) and (D) only (B), (C) and (D) only (A), (B) and (E) only |
(A), (B) and (E) only |
The correct answer is option (4) : (A), (B) and (E) only Explanation : (A) Profit earned by American Express Bank from its Branch in India: Yes, this profit is generated from economic activity within India and hence contributes to GDPMP. (B) Dividends paid to shareholders of a firm situated in Kerala: Dividends represent income distribution from the profits of a firm. Since the firm is located within India (Kerala), this transaction involves income generated domestically and is included in GDPMP. Included. (C) Donations made to a religious institution: Donations are transfers of money and do not represent production of goods or services. Hence, they are not included in GDPMP. Excluded. (D) Salary paid to an Indian working in Japanese Embassy: This is income earned by a resident for services rendered to a foreign entity and isn't part of domestic production. Excluded. (E) Purchase of a taxi by a Travel Services company: The purchase of a taxi is a transaction involving the acquisition of a capital good within the country. It contributes to investment in the domestic economy and is included in GDPMP. Included. |