Expenditure on intermediate goods will not be included in national income as it is included in final expenditure. Plz explain this line with the help of example
Dear Student,
Expenditure in intermediate goods is not included in national income as they are included in final expenditure to avoid double counting . Expenditure in intermediate consumption will not be included because if they are included they will create problem of double counting.So to avoid problem of double accounting, they are only included once at the time of final expenditure.
Hope this information will clear your doubts on this topic.
For example : A farmer produces sugarcane and sold it for rs 200 and then sugar mill purchase the sugarcane and sold it for rs 500. So we will only consider rs. 500 as final expenditure
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards
Expenditure in intermediate goods is not included in national income as they are included in final expenditure to avoid double counting . Expenditure in intermediate consumption will not be included because if they are included they will create problem of double counting.So to avoid problem of double accounting, they are only included once at the time of final expenditure.
Hope this information will clear your doubts on this topic.
For example : A farmer produces sugarcane and sold it for rs 200 and then sugar mill purchase the sugarcane and sold it for rs 500. So we will only consider rs. 500 as final expenditure
If you have any more doubts just ask on the forum and our experts will try to help you out as soon as possible.
Regards