Question

Giving reason, state whether the following is treated in estimating national income:

Purchases made by foreign tourists.

Answer 1

• Yes, purchases made by foreign tourists are included in the estimation of national income.
• The domestic economy treats purchases made by foreign tourists as exports of services or goods.
• National income includes all expenditures on final goods and services produced within the domestic economy, whether consumed by residents or non-residents.
• Since foreign tourists are purchasing domestic goods and services, their spending is considered part of the country’s final output, and therefore, it is included in national income.