Question

Payment of interest by a firm to a bank is ______ in the estimation of National Income.  

Options

• Included

• Deducted

• No effect

• None of the above

Answer 1

Payment of interest by a firm to a bank is included in the estimation of National Income.  

Explanation:

Interest paid by a company to a bank will be 'included' in the calculation of national income because it is a factor of income. Firms also take out loans with the aim of investing.