Question

Giving reason, state whether the following is included in national income:

Expenditure on construction of a house.

Answer 1

• Yes, expenditure on construction of a house is included in national income.
• This is because construction of a house is treated as a productive activity that results in the creation of a new asset (a house), which is considered a final good.
• It involves payment to factors of production such as labour, capital, and land, and contributes to the current output of goods and services in the economy.
• Since national income includes the value of all final goods and services produced within a country during a given period, expenditure on the construction of a house is included in the estimation of national income.