Which of the following is added in the estimation of national income?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Bonus paid to employees.
In the estimation of national income (particularly using the income method), only factor incomes are included. These are payments made to factors of production (land, labor, capital, and entrepreneurship) for their contribution to the production process.
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Payment of interest by an individual to a bank → Not included, as it is a personal transaction and not part of factor income.
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Bonus paid to employees → Included, as it is part of compensation of employees, which is a component of national income.
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National debt interest → Not included, as it is a transfer payment made by the government, not against any productive service.
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Payment of corporate tax by a firm → Not included. Corporate tax is a portion of the Profits that is transferred to the government. Since profits are already counted as a whole in the Income Method, counting the tax separately would lead to double counting.