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National Income Accounting — Economics STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceEconomicsNational Income Accounting4 Marks
Question
Giving reasons, classify the following into intermediate goods and final goods:
  1. A machine purchased for installation in a factory.
  2. Fees paid to a lawyer by a producer.
  3. Milk purchased by a hotel.
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Answer

  1. A machine purchased for installation in a factory is a final good, because it is an investment.
  2. Fees paid to a lawyer by a producer is intermediate expenditure because both are producers. So it is producer- producer transaction, i.e., intermediate transaction. Thus, it is not included in National Income estimation.
  3. Milk purchased by a hotel is an intermediate good because it will be utilized further (re processed) in making tea, sweet dish, curd etc.

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