Which of the following is the example of investment expenditure?
Answer & explanation
Correct answer: option 3
The correct answer is option 3: expenditure by the farmers on the purchase of tractors or threshers.
Expenditure by the farmers on the purchase of tractors or threshers is an example of investment expenditure.
Investment expenditure refers to spending on capital goods that are used to produce other goods or services, or to create future benefits. In this case, purchasing tractors or threshers by farmers qualifies as investment expenditure because these are capital goods that enhance agricultural productivity and contribute to future output.
-
Non-profit institutions serving society: Expenditure by non-profit institutions serving society, such as charitable organizations or NGOs, typically falls under consumption expenditure rather than investment expenditure. These organizations primarily provide services aimed at meeting immediate needs rather than acquiring capital assets for future production.
-
Expenditure on purchase of goods for consumption by the defence personnel: This expenditure falls under consumption expenditure as it involves purchasing goods for immediate consumption by defense personnel.