Final consumption expenditure is mostly undertaken by households. Which of the following is an exception mentioned in the expenditure method?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Firms buying consumables for guests or employees
Households do most of the consumption expenditure. One exception is when firms buy consumables to treat guests or for their employees.
Machines and added inventories are investment, and raw materials are intermediate goods.
NCERT (2026-27): “2.2.2 Expenditure Method … Firm i can make the final expenditure on the following accounts (a) the final consumption expenditure on the goods and services produced by the firm. We shall denote this by Ci. We may note that mostly it is the households which undertake consumption expenditure. There may be exceptions when the firms buy consumables to treat their guests or for their employees …” |