Giving reason, explain how should the following be treated in estimating national income: (i) Interest paid by banks on deposits by individuals.
Giving reason, explain how should the following be treated in estimating national income:
(i) Interest paid by banks on deposits by individuals.
(ii) National Debt interest.
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Reasons:
(i) Interest paid by Banks-It will be included as it is a factor income.
(ii) National Debt Interest-It will not be included as it is assumed that Government borrows for consumption Purpose. Therefore, it is treated as transfer income.
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