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How will vou treat the following w hile 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. |
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Answer» (a) Profits earned by branches of country’s bank in other countries will not be included in the domestic product of the country because it amounts to factor income from abroad which is not included in the domestic income. (b) Gifts given by an employer to his employees on Independence Day will not be included in the domestic product of the country because it is not an expenditure on productive activity. It is a transfer payment and not a factor payment. (c) Purchase, of goods by foreign tourists will be included in the domestic product of the country because goods purchased by the foreign tourists are produced by the producers in the domestic territory of the country. |
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