Question

Q-14
+1
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Income tax is treated as .......... in the es-
timation of national income.?

Answer 1

Explanation:

The sum of final expenditures in an economy must be equal to the income received by all the factors of production taken together (final spending on final goods, it does not include spending on intermediate goods). This follows from the simple idea that the revenues earned by all the firms put together must be distributed among the factors of production as salaries, wages, profits, interests earning and rents.

Answer 2

Answer:

When the income tax by a firm refers to corporate tax, it is a transfer payment made by the firm to the government. It constitutes a part of income, and hence it will not be taken into account individually in the estimation of national income.

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