Is payment of electricity bill by a school included/excluded in national income
Is payment of electricity bill by a school included/excluded in national income
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No,
Payment of electricity bill by a school will not be included in the national income as it is an intermediate cost and will be deducted from the value of output while arriving at the national income.
Explanation:-
Only the value of the final goods and services is added to the national income.
the cost of an electricity bill by a school is already added to the final services of the school.
If the payment of the electricity bill is added to the national income, It will lead to double counting.
Thus it is subtracted from the value of output in while calculating national income through the product method.
National Income = Value of output – Intermediate consumption + NFIA
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