Is purchase of raw materials by a production unit included/excluded in National Income
Is purchase of raw materials by a production unit included/excluded in National Income
Anurag Pathak Changed status to publish
No,
The purchase of raw materials by a production unit will not be included in the national income as it is a part of the intermediate consumption expenditure.
The value of intermediate consumption is already added to the value of the final goods.
Only the value of final goods and services is added to calculate the national income.
if the value of intermediate consumption is also included, it will lead to double counting and inflate the national income.
Thus it is not included in the national income and subtracted from the value of output in the production method while calculating the national income
Anurag Pathak Changed status to publish
