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Question
How is the following treated in national income calculation?
Income from smuggling
Short Answer
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Solution
Income from smuggling is not included in the estimation of national income. Smuggling is illegal, so the goods produced or sold through it are not part of the economy’s legal production boundaries. National income measures the value of goods and services produced through legal and productive economic activities. Income from illegal activities like smuggling does not contribute to legal production, and including it would distort the measurement of national income.
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