Question

Should purchase of wheat in the wholesale market be treated as the purchase of intermediate goods? Increase in national income always implies…

Accepted Answer

(a) Yes. Purchase of wheat in the wholesale market will be treated as intermediate goods as it is meant for resale in the same year. (b) No. If in an economy the increase in national income is due to increase in domestic production of final goods and services over the period of time, then it would lead to increase in domestic income. However, if the increase in National income is due to increase in net factor income from abroad then it would not lead to increase in domestic income.

(a)
Should purchase of wheat in the wholesale market be treated as the purchase of intermediate goods ?
(b)
Increase in national income always implies increase in domestic income. Elucidate.

Marking-scheme solution

More from National Income Accounting

(a)Should purchase of wheat in the wholesale market be treated as the purchase of intermediate goods ?(b)Increase in national income always implies increase in domestic income. Elucidate.

Marking-scheme solution

More from National Income Accounting

(a)
Should purchase of wheat in the wholesale market be treated as the purchase of intermediate goods ?
(b)
Increase in national income always implies increase in domestic income. Elucidate.