Is purchase of furniture by a firm included/excluded in national income?
Is purchase of furniture by a firm included/excluded in national income?
Anurag Pathak Changed status to publish
Yes,
The purchase of furniture by a firm will be included in the national income as it is a part of the capital formation or investment by the firm.
Explanation:-
Furniture purchased by a firm is an investment and considered as final goods.
The value of final goods is included in the national income.
In other words, the purchase of furniture is an addition to the present stock of capital during the year. It is called capital formation.
Capital formation is added to the national income through the expenditure method.
Anurag Pathak Changed status to publish
