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Giving Reason Explain How Should the Following Be Treated in Estimating National Income: I. Expenditure on Fertilizers by a Farmer. Ii. Purchase of Tractor by a Farmer. - Economics

Giving reason explain how should the following be treated in estimating national income:

i. Expenditure on fertilizers by a farmer.
ii. Purchase of tractor by a farmer.

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Solution

i. Expenditure on fertilisers by a farmer will not be included in the estimation of National Income because it is an intermediate consumption to improve crop productivity.

ii. Purchase of a tractor by a farmer will be included in the estimation of National Income because it is part of gross domestic capital formation.

Concept: Concept of National Income
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