Which of the following factors will not underestimate the national income?
Answer Details
The factor that will not underestimate national income is the increase in the value of services not paid for.
National income is the total income earned by a country's citizens, including all goods and services produced within the country's borders over a certain period. However, there are various factors that can cause national income to be underestimated.
A rapid decrease in prices can underestimate national income because it can make it appear as though less output is being produced, even if the physical volume of goods and services produced remains the same.
Increased subsistence production, which refers to the production of goods for personal consumption rather than for sale in the market, can also underestimate national income because it is not captured in official statistics.
The practice of specialization of labor, where individuals focus on producing specific goods or services in which they have a comparative advantage, can also underestimate national income if the value of their specialized production is not accurately measured.
However, an increase in the value of services not paid for, such as volunteer work or services provided within households, can actually help to more accurately reflect national income. By measuring and accounting for the value of these services, which are often not captured in official statistics, national income can be more accurately estimated.