XII ECONOMICS

NATIONAL INCOME
ITMES INCLUDED OR NOT INCLUDED IN NATIONAL INCOME
MOST IMPORTANT FOR BOARD EXAM 2023
YOU TUBE: SUNIL PANDA – THE EDUCATOR
Classify the following as Stock and Flow:

Items Stock / Flow

Amount of bank deposits as on 31-3-2021 Stock
Losses Flow
Production of cement in the year 2021 Flow
Profit Flow
Population of India as on 31st march,2021 Stock
Number of literate people as on 31-3-2021 Stock
Savings Flow
National income of a country Flow
Capital Stock
Number of persons employed during December Flow
Balance in a bank account Stock
Raw material in a godown as on 31st Jan, 2022 Stock
Production Flow
Wealth Stock
Gross domestic product Flow
Money Supply Stock
Change in stock/ inventory Flow
Depreciation Flow
Pocket Money Flow
Inventory Stock
2000 note Lying in wallet of Sumit, a student Stock

Classify the following as factor income or transfer income:

Items Factor income or transfer income

Unemployment allowances Transfer income
Salary received by Rakesh from a company Factor income
Financial help to earthquake victims Transfer income
Compensation received from the employer Factor income
Claim received from insurance company by an injured worker Transfer income
Birthday gift received from a friend Transfer income
Bonus received on Diwali Factor income

Classify the following as final goods or intermediate goods.

Items Final goods or Intermediate goods

Machine purchased by firm Final goods
Soft drink purchased by the school canteen Intermediate goods
Clothes purchased by an individual Final goods
Coal purchased by a factory Intermediate goods
 Electricity consumption in a business Intermediate goods
Book purchased by a student Final goods
Book purchased by a book seller Intermediate goods
Postage stamps purchased by a consumer Final goods
Postage stamps purchased by a business unit Intermediate goods
Exhaust stamps used for making water coolers Intermediate goods
Seeds purchased by a farmer to produce wheat Intermediate goods
Seeds purchased for kitchen gardening Final goods
Machines purchased by a dealer of machines Intermediate goods
Car purchased by a household Final goods
Sewing machine purchased by a housewife Final goods
Furniture purchased by a school. Final goods
Chalks, duster, etc. purchased by a school Intermediate goods
Computers installed in an office Final goods
Coal used by household. Final goods
Electricity consumption in a business Intermediate goods
Fertilizers and seeds used by a farmer. Intermediate goods
Tractor purchased by a farmer. Final goods
Printer purchased by a lawyer for his office Final goods
AC purchased by a Factory Final goods

Items included / excluded in National income

Items Included / Excluded in

National income
Construction of a new house Included
Winning of a lottery prize or crossword or contests or other windfall gains Excluded
Increase in the price of stocks lying with a trader Excluded
National debt interest Excluded
Interest on public debt Excluded
Rent free house given to an employee by an employer Included
Profits earned by the branches of a foreign bank in India Excluded
Purchase by foreign tourists Included
Food purchased by a foreign tourist at a hotel in New Delhi Included
Rent received by Indian residents on their buildings rented out to foreigners in India Included
Payment of fees to a lawyer engaged by a firm Excluded
Expenditure by a firm on payment of fees to a chartered accountant Excluded
Free medical facilities by the employer Included
Free boarding and lodging provided to a domestic servant Included
Gifts received from abroad Excluded
Gifts received from employer Excluded
Profit of Reliance industries from its chemicals business in Australia Included
Salaries received by Indian residents working in Russia Embassy in India Included
Subsidized launch served to workers in a factory Included
Firm incurred expenditure on medical treatment of employee’s family Included
Old age pension Excluded
Durable goods purchased by a household Included
Purchase of car by a household Included
Profit earned by an Indian Bank from its branches abroad Included
Earnings of shareholders from the sale of shares Excluded
Expenditure on advertisement by a firm Excluded
Commodities used in scientific research Excluded
Receipts from sale of land Excluded
Financial help received by flood victims Excluded
Purchase of machine by a factory Included
Purchase of taxi by a taxi-driver Included
Royalty Included
Commission on sale of second-hand goods Included
Brokerage payment on sale of shares Included
Dividend received by an Indian from his investment in shares of a foreign company Included
Purchase of raw materials by a production unit Excluded
Milk purchased by a sweet shop to make milk cake Excluded
Expenditure on engine oil by car service station Excluded
Earning of a self-employed doctor having a clinic at his own residence Included
Money received from the sale of a second-hand car Excluded
Imputed rent of self-occupied houses Included
Contribution to provident fund by employer Included
Value of interest foregone on loans provided by employer to employee Included
Wheat grown by a farmer but used entirely for family’s consumption Included
Expenditure on the construction of a flyover by the government Included
Commission received by a dealer from the buyer and seller of a house Included
Growing vegetables in a kitchen garden of the house Excluded
Services rendered by family members to each other Excluded
Expenditure by government in providing free education Included
Expenditure on free services provided by government Included
Expenditure by government on providing free educational services Included
Expenditure on providing police services by the government Included
Government expenditure on street lighting Included
Insurance premium paid by an household Included
Fees received from students Included
Mineral wealth of a nation Excluded
Value of wood purchased for manufacturing a table Excluded
Expenditure on the purchase of cold drink by a school canteen from the manufacturer Excluded
Transport expenses by a firm Excluded
Expenditure on engine oil by car services station Excluded
Purchase of equipment’s for installation in a factory Included
Payment of interest tax Excluded
Payment of death duty Excluded
Goods and Services tax received by the government Excluded
Salaries paid to Russians working in Indian Embassy in Russia Excluded
Capital gains to Indian residents from sale of shares of a foreign company Excluded
Harish works in USA and sends money to his family in India Excluded
Destruction of building due to an earthquake Excluded
HP uses its own new Laptops in its office for self-consumption Included
Purchase of a truck to carry goods by a production unit Included
Direct purchase made abroad by government Included
Earning from a part time job in Mc Donald’s by a student Included
Receipt from sale of property inherited from a relative Excluded
Entertainment allowance to an employee for entertaining business guests Excluded
Expenditure on the purchase of shares of a new company Excluded
Sales of bonds by a company Excluded
Purchase of shares by a domestic firm Excluded
Goods lying within the production boundary Excluded
Money received by a family in India from relatives working abroad Excluded
Dividend received by a foreigner from investment in shares of an Indian company Excluded
Sale of an old house Excluded
 Expenditure on the purchase of an old house Excluded
Purchase of house by the tenant Excluded
Purchase of rented factory building by the factory owner Excluded
Insurance money received from oriental insurance due to destruction of factory due to Excluded
fire
Payment of interest by banks to its depositors Included
Payment of interest by a government firm Included
Payment of interest by a firm Included
Payment of interest by a firm to a bank Included
Interest received on loans given to a friend for purchasing a car Excluded
Interest payment on loan taken by an individual to buy a motor cycle Excluded
Payment of interest on a loan taken by an employee from the employer Excluded
Payment of interest by an individual to a bank Excluded
Payment of interest by an individual to a bank on a loan to buy a car Excluded
Interest received on loan given to a foreign company in India Included
Interest received on debentures Included
Expenditure on improvement of fixed capital assets Included
Expenditure on construction of a house Included
Expenditure on adding a floor to the building Included
Scholarship given to Indian students studying in India by a foreign company Excluded
Financial assistance to flood victims Excluded
Value of bonus shares received by shareholders of a company Excluded
Purchase of uniforms for nurses by a hospital Excluded
Expenditure on maintenance of building Excluded
Expenditure on maintenance by a firm Excluded
Payment of interest on borrowings by general government Excluded
Family members working free on farm owned by family Included
Payment of bonus by a firm Included
Bonus paid to employees Included
Purchase of tractor by a farmer Included
Expenditure on fertilizers by a farmer Excluded
Purchase of furniture by a firm Included
Purchase of refrigerator by a firm for own use Included
Expenditure on purchasing a machine installed in a production unit Included
Expenditure on education of children by a family Included
Payment of electricity bill by a school Excluded
Electricity consumed by a firm Excluded
Dividend received by shareholders Included
Festival gift from an employer Excluded
Contribution to provident fund by employees Excluded
Addition to stocks during a year Excluded
Payment of corporate tax by a firm Excluded
Cash transfer by government of India to the people below poverty line Excluded
Payment of family pension to the families of CRPF personnel who lost their lives in Included
Pulwama attack
Services of a school Teachers Included

Items included / excluded in Domestic income

Items Included / Excluded in

Domestic income
Profits earned by branches of foreign bank in India Included
Profit earned by foreign companies in India Included
Profit earned by a resident of India from his company in Singapore Excluded
Profits earned by a company in India which is owned by a non-resident Included
Profits earned by a branch of State Bank of India in Japan Excluded
Profit earned by branches of country bank in other countries Excluded
Rent received by an Indian from his building in London Excluded
Compensation of employees to the residents of Japan working in Indian embassy in Japan Included
Rent received by an Indian resident from Russian Embassy in India Excluded
Salaries to Indian residents working in the Russian Embassy in India Excluded
Profits earned by Indian Employees working in the Pakistan Embassy in India Excluded
Factor income from abroad Excluded
Scholarship given by the government of India Excluded
Expenditure on old age pensions by government Excluded
Payments of bonus by a firm Included
Consultancy fees paid to a foreign expert Included
Financial sale and purchase of shares, bonds and debenture Excluded
Compensation of employees paid by a foreign company located in India Included
Compensation of employees paid by American Embassy in India to resident Indians Excluded
Earning of American Express Bank branch located in Chennai Included
Broker’s commission on the sale of an old car Included
Profits earned by a company partly owned by residents and party owned by non- Included
residents and located in India
Services rendered by housewives Excluded
Capital gains Excluded
Windfall gains Excluded
Remittances from non-resident Indians to their families in India Excluded
An Indian owned aeroplane operating between Singapore and Dubai Included
Gifts given by an employer to his employees on Independence Day Excluded
Purchase of goods by foreign tourists Included
Payment of fees to a chartered Accountant by a firm Excluded
Compensation given by insurance company to an injured worker Excluded
Financial aids received from abroad after Fani Cyclone Excluded
Purchase of second hand machinery from abroad Excluded