While estimating national income by the income method, which of the following is included in compensation of employees?
Answer and explanation
Correct answer: Employer’s contribution to an employee’s provident-fund account
Compensation of employees includes wages and salaries plus employers’ social-security contributions made for their employees. A provident-fund contribution is connected with the employee’s employment and is therefore included. Old-age pensions and unemployment allowances are transfer payments, while dividends are property income. Hence, option A is correct.
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What is the correct answer to this question?
Employer’s contribution to an employee’s provident-fund account
Why is this the correct answer?
Compensation of employees includes wages and salaries plus employers’ social-security contributions made for their employees. A provident-fund contribution is connected with the employee’s employment and is therefore included. Old-age pensions and unemployment allowances are transfer payments, while dividends are property income. Hence, option A is correct.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Income Method.
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