Question
Why are the following not included in national income?
(i) Purchase of second-hand machine from a domestic firm.
(ii) Purchase of new shares of a domestic firm.
(iii) Scholarship to students by the government.
(iv) Commission paid to the dealer of second hand goods for buying such goods.
(v) Wealth tax.
(vi) Indirect tax (like sale tax or excise duty).
(vii) Old age pension.
Solution
(i) Because second-hand machine is not a part of current production.
(ii) Because it is a financial transaction which does not help directly in production.
(iii) Because it is a mere transfer income.
(iv) Because the commission to the dealer is not for his productive services.
(v) Because it is a compulsory transfer payment.
(vi) Because it does not add in the flow of goods and services.
(vii) Because it is paid on account of old age of a person and not for rendering productive service.
