Giving reason, explain how the following should be treated while estimating national income: (i) Payment of excise duty by a firm.
Giving reason, explain how the following should be treated while estimating national income:
(i) Payment of excise duty by a firm.
(ii) Payment of interest by a firm.
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Reasons:
(i) Payment of excise duty only increases the market value of final goods and services. Therefore, this is not included in the estimation of national income.
(ii) Payment of interest by a firm is included in the national income because a firm takes loans for productive purposes.
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