Question

Giving reason, explain how should the following be treated in estimating national income:

(i) Payment of bonus by a firm.

(ii) Payment of interest on a loan taken by an employee from the employer.

Answer 1

Reasons: 

(i) Payment of Bonus- It will be included in national income as it is a part of the compensation of employees. 

(ii) Payment of Interest-lt will not be included in the national income accounting as it is assumed that the loan is taken for consumption purpose and therefore, treated as a transfer in cause.