question_answer

Giving reasons, explain the treatment assigned to the following while estimating National Income.

(i) Expenditure on maintenance of a building.

(ii) Expenditure on adding a floor to the building.

Answer:

(i) Expenditure on maintenance of a building will not be included in the National Income because it is not adding anything in capital formation.

(ii) Expenditure on adding a floor to the building will be included in the National Income because it is a part of domestic capital formation.