Why can brokerage commission be counted in GNP even though the sale of old assets is not counted?
Answer and explanation
Correct answer: Because brokerage is a reward for a current service
The sale of an old asset is generally only a transfer of ownership, so the asset's original production was recorded in an earlier period and must not be counted again. However, a broker provides a real service during the current period. The commission paid for arranging or facilitating that sale is current factor income and is therefore included in current GNP.
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What is the correct answer to this question?
Because brokerage is a reward for a current service
Why is this the correct answer?
The sale of an old asset is generally only a transfer of ownership, so the asset's original production was recorded in an earlier period and must not be counted again. However, a broker provides a real service during the current period. The commission paid for arranging or facilitating that sale is current factor income and is therefore included in current GNP.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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