Question

Will the following be included in the national income of a country? Give a reason for your answer:

Furniture purchased by households.

Answer 1

1. Yes, the purchase of furniture by households will be included in the national income of a country, provided it is newly produced.
2. This is because the expenditure on furniture represents spending on final goods produced during the year, and national income includes the value of all final goods and services produced within a country in a given period.
3. However, if the furniture purchased is second-hand, it will not be included in the national income, as it was already counted in the year it was first produced and sold. Therefore, the purchase of new furniture by households is included in national income, as it reflects current production and contributes to the flow of goods and services in the economy.