The correct answer is Option 4: Expenditure on maintenance of an office building
Final expenditure is that part of expenditure which is undertaken not for intermediate purposes. Expenditure on maintenance of an office building is an intermediate consumption expenditure on fixed asset and not final expenditure.
Expenditure Method of National Income adds up the following:
-
Private Final Consumption Expenditure (C) → e.g., households consuming goods and services.
-
Government Final Consumption Expenditure (G) → e.g., government buying goods and services for use by society.
-
Gross Domestic Capital Formation (I) → includes business fixed investment, residential construction, inventories.
-
Net Exports (X – M) → exports of goods and services (minus imports).
Lets analyse all Options:
-
Consumer goods exported to the rest of the world: Consumer goods exported to other countries are part of final expenditure, as they are counted as expenditure on final goods produced within the domestic economy.
-
Consumer goods purchased by the government: Consumer goods purchased by the government are part of final expenditure, as they represent expenditure on final goods by a component of the economy (the government).
-
Business fixed investment: Business fixed investment, which includes spending on capital goods such as machinery, equipment, and buildings, is also part of final expenditure. It represents spending on final goods produced within the economy by businesses.
-
Expenditure on maintenance of an office building: This expenditure typically involves spending on intermediate goods and services used to maintain the office building, rather than on final goods and services. Therefore, it is not part of final expenditure.
|
