Question

How should the following be treated in estimating National Income of a Country? Give valid reasons.

Expenditure on upgradation of fixed asset by a firm.

Answer 1

Expenditure on upgradation of fixed asset by a firm: Included in national income.

Reason: It is capital formation expense. As a result, it is a sort of investment expenditure, and it is included in the estimation of National Income on both consumption and investment.