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    Question

    Which of the following is included when calculating

    National Income?
    A Lottery winnings received by an individual Correct Answer Incorrect Answer
    B Purchase of milk by a dairy shop for resale Correct Answer Incorrect Answer
    C Interest paid on national debt by the government Correct Answer Incorrect Answer
    D Salary earned by citizens working abroad and remitted back to India Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    National Income includes factor income earned by residents from within the country and abroad. Remittances or income earned by Indians working abroad and sent back to India is counted as Net Factor Income from Abroad (NFIA) and is added to national income. Lottery winnings (A) are transfer payments, not earned income → excluded Milk purchased by dairy shop (B) is an intermediate good, used for resale/processing → not included to avoid double counting Interest on national debt (C) is a transfer payment made by the government → excluded D is the only option representing factor income, hence included

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