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Giving reason explain how the following should be treated in estimation of national income.

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(i) Payment of interest by a firm to a bank:- Included – Treated as factor payment by the firm because the firm borrows money for carrying out production and therefore included in National Income. 

(ii) Payment of interest by a bank to an individual:- Included- treated as a factor payment because bank borrows for carrying out banking services and therefore included in NI. 

(iii) Payment of interest by an individual to a bank:- Not Included- because the individual borrows for consumption and not for production. 

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