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Questions and Answers
Which of the following is a challenge in estimating national income?
Which of the following is a challenge in estimating national income?
- Difficulty in defining economic output
- Variability in market prices
- Lack of reporting by businesses
- All of the above (correct)
What part of the Rs. 60,000 sale proceeds from a used car will be included in national income?
What part of the Rs. 60,000 sale proceeds from a used car will be included in national income?
- Rs. 30,000
- No part of the sale proceeds (correct)
- 50% of Rs. 60,000
- Full amount of Rs. 60,000
How are fees paid to real estate agents treated in national income calculation?
How are fees paid to real estate agents treated in national income calculation?
- Dependent on the region
- They are excluded from national income
- Partially included based on service type
- They are included in national income (correct)
How should electricity sold to a consumer household be treated in national income calculation?
How should electricity sold to a consumer household be treated in national income calculation?
What is the classification of electricity sold to a steel plant in national income calculation?
What is the classification of electricity sold to a steel plant in national income calculation?
Which statement accurately describes transfer payments in national income estimation?
Which statement accurately describes transfer payments in national income estimation?
How are economic activities from used goods generally treated in national income?
How are economic activities from used goods generally treated in national income?
Which of the following scenarios affects national income calculations?
Which of the following scenarios affects national income calculations?
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Study Notes
Problems in Estimating National Income
- Lack of an agreed definition of national income complicates calculations.
- Difficulty in distinguishing between final goods and intermediate goods affects accuracy.
- Transfer payments pose challenges as they do not contribute to production.
Sale of Used Goods
- Sale proceeds from a used car (e.g., Rs. 60,000) are not included in national income.
- Used goods represent a transfer of existing assets, previously accounted for in national income when produced.
Transactions in National Income Calculation
- Fees for real estate agents and lawyers are included in national income as they represent current production.
- Excluded transactions are those that do not represent current production.
Electricity Sales to Consumers
- Electricity sold to consumers is treated as a final good and does not require further processing.
- Once sold, electricity becomes part of the active economic flow and is included in national income.
Electricity Sales to Industry
- Electricity sold to steel plants is categorized as an intermediate good.
- Intermediate goods are not included in national income calculations as they are part of the production process.
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