Answer to Question #92078 in Macroeconomics for Abkaa

Question

Why receipt from sale of building, land or any other fixed asset is not included in national income ?
They generate income so they should be included ?

Answer 1

Sale of building, land and any other fixed asset are not included in the national income. The main reason is that they are not related to the production of services and goods. However, the national income comprises the service value rendered by the agents in selling these fixed assets. National income refers to the total income made by all enterprises and residents of a country over a specified period. Also, it refers to the total value of all services and goods made over a specified period. National income is calculated using two formulas; the income method and expenditure method respectively. National Income = Rent + Compensation + Interest + Profit + Mixed-Income, then, National Income = C + G + I + NX. C represents household consumption, G stands for government expenditure, I stands for investment expense and NX stands for net exports.