Which of the following is NOT included in-measuring the National income through the income approach?

Step 1: Analyze the question We are asked which item is NOT counted when measuring national income by the income approach.

Step 2: The concept The income approach adds up all incomes earned by factors of production for their contribution to producing goods and services:

• Wages and salaries (labour)
• Rent (land)
• Interest (capital)
• Profit (entrepreneurship)

Only earned income (payment for productive services) is included. Transfer payments, such as gifts, pensions, and allowances given without any good or service in return, are excluded. They merely move money from one person to another and create no new output. Counting them would be double counting, because the money was already counted as the giver's income.

Step 3: Check each option

• A. Allowance given to an aged mother by a civil servant is a transfer payment. The mother provides no productive service, and the money was already counted as the civil servant's salary. Not included.
• B. Income earned by a bricklayer is wages for labour. Included.
• C. Profit of Nigerian Bottling Company plc is a return to entrepreneurship. Included.
• D. Profit of NITEL plc is also a return to entrepreneurship. Included.
• E. Salary of a doctor is payment for labour. Included.

Step 4: Answer The allowance to the aged mother is a transfer payment, so it is excluded.

Exam tip: When you see words like gift, allowance to dependants, pension, scholarship, or social benefit in a national income question, think "transfer payment, so exclude it." Ask yourself: "Was this money earned for producing something?" If not, leave it out.