Interest on public debt included/excluded in National Income
Determine the following item included/excluded in the National Income
Interest on public debt included/excluded in National Income
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No,
Interest on public debt is not included in the national income as it is the interest paid on loans taken by the government to meet its consumption purposes and does not add to the flow of goods.
Explanation:-
Interest on public debt is the loan taken by the government from the general public.
It is taken by the government to meet its day-to-day administrative expenses.
Even if the loan is taken by the government for the development of the country’s infrastructure (investment). The government does not guarantee that it would be exactly used for that purpose.
Thus Interest on public debt is not included in the national income as it is against the loan for consumption purposes and does not add to the flow of goods..
Anurag Pathak Changed status to publish
