Question : Which of the following is not included in the calculation of national income?
Option 1: Wages earned by foreign nationals in the country
Option 2: Interest income earned by domestic residents from foreign investments
Option 3: Profit earned by domestic firms in foreign countries
Option 4: Payments for goods and services in the underground economy
Correct Answer: Payments for goods and services in the underground economy
Solution : The correct answer is (d) Payments for goods and services in the underground economy
Payments for goods and services in the underground economy are not included in the calculation of national income. The underground economy refers to economic activities that are conducted outside the formal channels and are not reported to the government. Since these activities are typically unrecorded and operate outside the official framework, the income generated from them is not captured in the calculation of national income. Wages earned by foreign nationals in the country, interest income earned by domestic residents from foreign investments, and profit earned by domestic firms in foreign countries are all included in the calculation of national income as they represent legitimate income flows associated with economic activities.
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