While using the income method to compute national income, which of the following is NOT to be included?
A) Income from lottery
B) Brokerage on sale and purchase of shares
C) Income from illegal activities like gambling

Correct option is D

The correct answer is (d)
• Income from Lottery (A): This is considered a windfall gain and not the result of any productive activity. Thus, it does not usually count towards the calculation of GDP using the income method.
• Brokerage on Sale and Purchase of Shares (B): While this might seem like a service, it's more a part of financial transactions and generally considered a transfer of existing assets rather than the creation of new production. However, the fees or commissions earned by brokers for these services do contribute to GDP, as they are part of the service industry.
• Income from Illegal Activities like Gambling (C): Illegal activities are not included in GDP calculations as they are not reported officially and do not comply with legal production.
   Information Booster:

There are three primary methods to compute National Income, each focusing on different aspects of the economy:
1. Production Method (Value-Added Method)
What: Measures the total value added at each stage of production in an economy.
Formula: National Income= Value of Output−Intermediate Consumption
Focus: Contribution of various sectors (agriculture, industry, services) to the economy.
2. Income Method
What: Calculates the total income earned by factors of production (land, labor, capital, and entrepreneurship).
Formula: National Income=Wages+Rent+Interest+Profits
Focus: Distribution of income among individuals and businesses.
3. Expenditure Method
What: Measures total expenditure incurred on final goods and services in an economy.
Formula: National Income=Consumption Expenditure+Investment Expenditure+Government Expenditure+(Exports−Imports)
Focus: Spending by households, businesses, government, and net exports.