How will you treat the following while estimating domestic product of a country? Give reasons for your answer
How will you treat the following while estimating domestic product of a country? Give reasons for your answer:
(a) Profits earned by branches of country’s bank in other countries.
(b) Gifts given by an employer to his employees on Independence Day.
(c) Purchase of goods by foreign tourists.
Anurag Pathak Changed status to publish November 12, 2023
Answer
(a) Profits earned by brances of a country’s bank in other countries:
It will not be included in the domestic income as the banks are located outside the domestic territory of the country.
(b) Gifts are given by an employer to his employees on Independence Day:
It will not be included in domestic income as any gift given by employer to employee on any festival is a transfer payment.
(c) Purchase of goods by foreign tourists:
it will be included in domstic income as purchse of goods by foreigners are exports and the production was done in domestic territory.
Anurag Pathak Changed status to publish November 12, 2023
