Explain the term 'compensation of employees' and its components. Giving reasons,state whether the following are treated a compensation of employees:

(a) Gifts by employers (b) Bonus

The explanation of the term 'Compensation of Employees' has been covered extensively along with all its components in the study material provided on our website. In order to view the explanation, go to the Chapter-2 (National Income Accounting) of Macroeconomics, then select Lesson-5 (Methods of Calculating National Income).

Regarding the second part of query, yes both the items are included in the Compensation of Employees.

Bonus is included in COE, as this is compensation paid to the employees in form of cash and is given as an honour in exchange of their hardwork and dedication towards the organisation.

Gifts by employers are also included in the COE, as these are compensation in kind.