- National income is typically calculated using income methods (sum of factor payments) or product methods (value added). - Only income earned by providing factor services (labour, capital, land, entrepreneurship) in the current period is included in national income (e.g., wages, rent, interest, profit). - Transfer payments (like pensions, unemployment benefits, subsidies, scholarships, gifts) are income received without providing any productive service in return during the current period.
Assertion (A): Transfer earnings are not to be included in the estimation of National Income. Reason (R) : Transfer earnings are not payments for factor services.
Asked in APPSC Group II Mains paper 2 2025 · Topic: National Income & Gross Domestic Product (Methods of National Income Estimation: Income, Expenditure, and Production/Value Added Methods)
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Answer: A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
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