Giving reason explain how should the following be treated in estimating national income: |
(i) Expenditure on fertilizers by a farmer. |
(ii) Purchase a tractor by a farmer. |
Answer:
(i) Expenditure on fertilizers by a farmer should not be included in the estimation of National Income. This is because it is an intermediate consumption that a farmer purchases in order to enhance the crop productivity, so that he can sell more output. (ii) Purchase of tractor by a farmer should be included in the estimation of National Income. This is because it is a part of Gross Domestic Capital Formation.
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