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Questions and Answers
What is the treatment of sale proceeds from a used car in national income calculation?
What is the treatment of sale proceeds from a used car in national income calculation?
How are the fees paid to real estate agents treated in national income calculation?
How are the fees paid to real estate agents treated in national income calculation?
What determines the inclusion of electricity sold to a consumer household in national income?
What determines the inclusion of electricity sold to a consumer household in national income?
How is electricity sold to a steel plant treated in national income calculation?
How is electricity sold to a steel plant treated in national income calculation?
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Which of the following is true about the payments involved in the production and sale of goods?
Which of the following is true about the payments involved in the production and sale of goods?
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Study Notes
Payments in National Income
- Payments for goods and services contribute to national income calculations.
- Certain transactions involving transfers of existing assets, like used cars, are excluded from national income.
Transactions Exclusion and Inclusion
- Sale of used cars: Proceeds are not included in national income since they involve a transfer of an asset from a previous production year.
- Fees paid to real estate agents and lawyers are excluded as they do not represent current production.
Final Goods and National Income
- Electric power sold to consumer households is counted in national income because it represents a final good that is sold without further processing.
- Final goods cease to be part of the active economic flow once sold, marking their inclusion in national income calculations.
Intermediate Goods and National Income
- Electricity sold to industries, like steel plants, is treated as an intermediate good and is therefore excluded from national income calculations.
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Description
Test your understanding of national income estimation with this quiz based on Chapter 1. The questions cover the basics of payments for goods and services, and the impact of transactions like used car sales on national income. Use this MCQ to reinforce your knowledge and prepare for further study.
