Question 11
National IncomeA factor that may cause the national income to be overstated is the
- A.inclusion of the output of subsistence producers.
- B.inclusion of wages of house-keepers.
- C.inclusion of pension payments to retirees.
- D.use of value-added method for its calculation.
Show the answer and explanation
Answer: C (inclusion of pension payments to retirees.)
Explanation
Pensions are transfer payments; including them counts income that is not payment for current output.