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Q24 (CDS-I/2012) Economy › Basic Concepts & National Income › GDP measurement methodology Answer Verified

National income ignores—

Result
Your answer: —  ·  Correct: D
Explanation

National income accounting measures the value of final goods and services produced by a nation's factors of production within a specific period [1]. It includes factor payments such as wages and salaries [1]. Exports of the IT sector are included as they represent the value of services produced and sold to the rest of the world [1]. However, national income ignores the sale of land because land is a pre-existing natural resource, not a produced good or service from the current accounting period. While the rent derived from land is included as factor income [1], the mere transfer of ownership of land (an asset) does not represent new production or value addition. Similarly, while a firm's total sales are used to calculate value added, the final national income figure focuses on the net value added rather than gross sales to avoid double counting.

Sources

  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 1: National Income > NATIONAL INCOME > p. 3
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