Which of the following will be included in national income, while using the income method to calculate the same? |
National debt interest Interest paid on a loan taken by a household from a bank to buy a car Interest received on debentures of a firm bought by a household Interest paid on a loan taken by an employee from his employer |
Interest received on debentures of a firm bought by a household |
National debt interest - National debt interest is a transfer payment thus, it won't be included in the national income. While computing the national income, we take into consideration only the factor payments. Interest paid on a loan taken by a household from a bank to buy a car - It will not be included in the computation of national income as the loan is taken by an individual for consumption purposes and not production purposes. Interest received on debentures of a firm bought by a household - Yes, it will be included in the national income as interest received will be considered as a factor income because the debenture which is issued is used for the purpose of production. Interest paid on a loan taken by an employee from his employer - It will not be included in the national income because the loan taken by the employee from the employer is not clear whether it is for the purpose of production. |