How can a broker's commission on the sale of an old house be treated in NNP?
Answer and explanation
Correct answer: It may be included because it is payment for a current service
The old house itself was produced in an earlier period, so its entire sale price is not current output and must not be counted again in NNP. However, the broker performs a current service in arranging and facilitating the transaction. The commission paid for that service is current factor income and can be included as the value of a present service.
Frequently asked questions
What is the correct answer to this question?
It may be included because it is payment for a current service
Why is this the correct answer?
The old house itself was produced in an earlier period, so its entire sale price is not current output and must not be counted again in NNP. However, the broker performs a current service in arranging and facilitating the transaction. The commission paid for that service is current factor income and can be included as the value of a present service.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
