Answer to Question #89158 in Macroeconomics for Sardarmal Bachhawat

Question

Why Indirect Taxes is included in Net National Disposable Income despite being transfer payment within domestic country and other domestic current transfers are excluded.

Answer 1

Indirect taxes are included in Net National Disposable Income because they are transfer earnings of the government. The market price of any product exceeds the income paid to the factors of production by the amount of indirect taxes hence they need to be deducted.