Question

Which of the following is included in the estimation of National Income?

• A. Transfer payments
• B. Sale of second-hand goods
• C. Imputed rent of self-occupied house
• D. Windfall gains like lottery winnings

Hint:

Included in National Income:
• Imputed rent
• Value of final goods
• Services rendered Excluded:
• Transfer payments
• Lottery winnings
• Sale of second-hand goods

Answer 1

The Correct Option is C

Concept: National Income measures the money value of all final goods and services produced within an economy during an accounting year. Only those activities that contribute to current production are included. While estimating National Income, economists follow specific rules regarding inclusion and exclusion of various items.

Step 1: Understand transfer payments.
Transfer payments include:
• Old age pension
• Scholarships
• Unemployment allowance
• Donations These payments are received without rendering any productive service. Hence they are excluded.

Step 2: Understand second-hand goods.
Sale of second-hand goods does not represent current production. The goods were already counted when originally produced. Therefore they are excluded.

Step 3: Understand windfall gains.
Lottery winnings and similar gains are not earned through production. Hence they are excluded from National Income.

Step 4: Understand imputed rent.
Suppose a person owns and occupies his own house. No actual rent is paid. However, that house provides housing services. Economists estimate a notional rent called: \[ \text{Imputed Rent} \] This value is included in National Income because it represents productive services.

Step 5: Choose the correct answer.
Among all options, only imputed rent contributes to current production. Therefore, \[ \boxed{\text{Imputed Rent of Self-occupied House}} \] is included. Hence, \[ \boxed{(C)} \]