Question : Which of the following is not included in the calculation of national income?
Option 1: Wages paid to workers
Option 2: Rental income
Option 3: Interest income
Option 4: Profits earned by foreign firms in the country
Correct Answer: Profits earned by foreign firms in the country
Solution : The correct answer is (d) Profits earned by foreign firms in the country
Profits earned by foreign firms in the country are not included in the calculation of national income. National income measures the income earned by domestic factors of production, which includes wages paid to workers, rental income, and interest income. Profits earned by foreign firms are part of the income generated by foreign factors of production and are accounted for in the balance of payments rather than in the calculation of national income.
Option 1: Wages earned by foreign nationals in the country
Option 2: Interest income earned by domestic residents from foreign investments
Option 3: Profit earned by domestic firms in foreign countries
Option 4: Payments for goods and services in the underground economy
Option 1: Rental income
Option 2: Interest income
Option 3: Capital gains
Option 4: Sales revenue earned by a firm
Option 1: Payments for government transfer programs
Option 4: Wage income
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