(i) The firm borrows from the bank to undertake productive activities. Hence, payment of interest by a firm to a bank will be included in National Income as the cost of borrowing funds.
(ii) Payments of interest by a bank to an individual will be included in National Income as the bank uses the individual's saving for productive purpose, that is, for lending further to earn interest.
(iii) Payment of interest by an individual to a bank will be included in National Income if the individual has taken loan for productive purpose. However, if the individual has taken loan from bank for consumption purpose, the interest paid shall not be included in National Income

(i) Payments of fees to a chartered accountant by a firm is an income of a professional and hence, it will be included in National Income while its estimation.
(ii) Corporate tax is included in the National Income as a part of corporate profit, not separately
(iii) Expenditure on purchasing a refrigerator for use by a firm will be included while estimating National Income because the refrigerator is purchased by the firm for final use.

(i) Taking care of aged parents will not be included in National Income as it does not involve the production of goods and services. It is a non-economic activity reflecting love and care for parents and it is difficult to estimate the market value of such activities.
(ii) Corporate tax is included in the National Income as a part of corporate profit, not separately.
(iii) Expenditure on providing police services by the government is included in National Income as it forms a part of government final consumption expenditure. 

Expenditure method of estimating National Income calculates the sum total of the expenditure by all the final users of goods and services plus addition to the stock with the producers and distributors. According to this method, expenditures on consumption and investment goods and government expenditures are aggregated as follows:
(i) Consumption Expenditure (C): Consumption expenditure includes expenditure on all 'goods and services.produced and sold to the final consumer during the year.
(ii) Investment 'Expenditure (I): Investment is the use of today's resources to expand tomorrow's production or consumption. Investment expenditure is expenditure incurred on by business firms on:
(a) New plants;
(b) Adding to the stock of inventories; and
(c) Newly constructed houses
(iii) Government Expenditure (G): Government expenditure includes all government expenditure on currently produced goods and services but excludes transfer p~yments while computing national income.
(iv) Net Exports (X - M): Net exports are defined as total exports minus total imports. Under expenditure method, National Income is calculated by summing up the final consumption expenditure, expenditure by business on plants, government spending and net exports.
National Income = C + I + G + (X - M)

(i) Accepting Deposits: Commercial banks accepts from the public abd lend this money to companies and other people for investment projects. The banks offer interests on deposits to the deposit holders. Deposits can be broadly into:
(a) Demand Deposits: These are, payable by the banks on demand from the account holder. For ex. Current and Savings Account Deposits.
(b) Time Deposits: These deposits have a fixed period to maturity. For ex: Fixed Deposits.
(ii) Advancing Loans: Extending loans is another important primary function of the commercial banks. After keeping a certain portion of the deposits as reserves, the bank gives the balance to the borrowers in the form of loans and advances. The rate at which banks lend out their reserve to investors is called the lending rate. Lending by commercial banks consists mainly od cash credit, demand and short-term loans to the private investors and banks. The credit worthiness of a person is judged by his current assets or the collateral.

The Total value of annual transactions in an economy includes transactions in all intermediate goods and services. It, therefore, is much greater than the nominal GDP. However, since there exists a stable, positive relationship between value of transactions and the nominal GDP, an increase in nominal GDP implies an increase in the total value of transactions. This results in a greater transaction demand for money.
 \({ M }_{ T }^{ d }=k.T\)
Since total value of nominal transactions is equal to the nominal GDP, the transaction demand for money can be written as:
 \({ M }_{ T }^{ d }=k.PY\)
Here, Y is the real GDP and P is the general price level or the GDP deflator. The equation shows the positive relation between transaction demand for money and the real income of an economy and also to its average price level.

Compensation of employees means the wages and salaries paid for mental and physical abilities of labourers in cash and kind. Following are the components of compensation of employees:
1. Wages and salaries in cash
2. Compensation in kind
3. Employers' contribution to social security schemes
4. Pension on retirement
(i) Gifts by employers are treated as compensation of employees because it is a payment made in kind.
(ii) Bonus is the part of supplementary income and hence, treated as compensation of employees.

(i) Old age pension given by the government will not be a part of domestic factor income of India be-cause it is transfer payment.
(ii) Factor income from abroad will not be a part of domestic factor income of India because it is a part of national factor income of India. Domestic factor income becomes national factor income by adding factor income from abroad to domestic income.
(iii) Salaries received by the Indian residents working in the Russian Embassy in India will be a part of the domestic factor income of India because these are the wages to Indian residents within the national territory of India.
(iv) Profits earned by a company in India, which is owned by a non-resident is not a part of domestic factor income of India because it is a retained earnings of resident company abroad. It is the part of factor income to abroad.

The following information is given:

Personal Disposable Income =  - Retained Earnings - Personal Taxes + Transfer Payments from the Government and the Firms
Substituting appropriate values from the table, we get:
1,200 = 1,900 - 200 - 600 + Transfer Payments from the Government and the Firms
Transfer payments from the Government and the firms
= 1,200 + 600 + 200 - 1,900
= 2,000 - 1,900
= 100
Thus, the value of transfer payments made by the government and firms to the households is Rs 100 crores

The following information is given:

National Income  =  + Net Factor Income from Abroad - Net Indirect Taxes - Depreciation
Substituting appropriate values from the table, we get:
850 = 1,100 + 100 - 150 - Depreciation
Depreciation = 1,100 + 100 - 150 - 850
= 1,200 - 1000
= 200
Thus, the aggregate value of depreciation is Rs 200 crores

Budget deficit means the excess of the government expenditure (G) over tax revenue (T).
Budget Deficit = G - T
Trade deficit means the excess of import (M) expenditure over the export revenue (X) earned by the economy.
Trade Deficit = M - X
Given: I - S = Rs 2000 crores
G - T = Rs 1,500 crores
Trade Deficit = (1-S) + (G-T)
= 2,000 + 1,500
= 3,500
Thus, the volume of trade deficit of the country is Rs 3500 crores.

Liquidity of an asset refers to its convertibility into money. Faster an asset is converted into cash, the more liquid it is. Money, therefore, is the most liquid asset.

The bank rate is the minimum rate at which the central bank discounts the first class bills of exchange and provides credit to the commercial banks.
Increase in the bank rate makes the borrowing from the central bank costlier than before. This reduces the lending or credit creation capacity of the commercial banks as they get funds at a higher interest rate from the central bank. Increase in bank rate also increases the rate at which commercial banks lends to the general public. Consequently, credit contracts in the economy.

Factor income from abroad is the sum total of factor incomes earned by normal residents of a country from abroad. For example, wages received by the Indian employees working in American Embassy. Factor income to abroad means payments to foreigner for their goods and services. For example, wages to foreign technical export.

(i) Capital is a stock concept because it is measured at a point of time.
(ii) Saving is a flow concept because it is measured over a period of time.
(iii) Gross Domestic Product (GDP) is a flow concept because GDP is measured over a period of time.
(iv) Wealth is a stock concept because it is measured at a point of time.