NDP Exclusion of Transfer Payments Explained
The Net Domestic Product (NDP) measures the total value of final goods and services *produced* within a country during a specific period, after accounting for depreciation.
Transfer payments are payments made by the government to individuals or households where no goods or services are produced in return. Examples include pensions, unemployment benefits, and subsidies.
Reason for Exclusion from NDP:
- NDP specifically measures current economic production.
- Transfer payments represent a redistribution of income, not a payment for a currently produced good or service.
- Since no corresponding production of goods and services occurs to match these payments, they are not included in the calculation of NDP.
Therefore, transfer payments are excluded because they do not represent any contribution to the current output of goods and services in the economy.
The correct option is: No corresponding production of goods and services has taken place to match such payments.
Important Questions from National Income Accounting
In the context of Indian economy, consider the following statements:
1) The growth rate of GDP has steadily increased in the last five years.
2) The growth rate in per capita income has steadily increased in the last five years.
Which of the statements given above is/are correct?
The national income of a country for a given period is equal to the
Which of the following Institutions estimate the national income of India?
Which of the following exchange rate is known as error prone swing?
______ are imposed on items like cigarettes and alcohol.
