Is purchase of tractor by a farmer included/excluded in national income?
Is purchase of tractor by a farmer included/excluded in national income?
Anurag Pathak Changed status to publish December 9, 2023
Yes,
It will be included in the national income as it is a part of the capital formation or investment by the farmer.
Explanation:-
The purchase of a tractor by a farmer will be used for productive purposes. It will help in further production.
It would add to the current flow of goods and services.
In other words,
It is the addition to the capital stock during the year and is known as capital formation.
Capital formation is added to the national income through the expenditure method.
Anurag Pathak Changed status to publish December 9, 2023
