Question
Giving reason, explain how are the following treated in estimating national income by income method.
(i) Interest on a car loan paid by an individual.
(ii) Interest on a car loan paid by a government-owned company.
Solution
(i) Interest will be included in national income if car is meant for production purposes but will not be included if car is for consumption purposes.
(ii) Interest will be included in national income because government-owned company is supposed to use car for rendering productive services.
