Question

difference between final expenditure and intermediate consumption

Answer 1

Answer:

(i) It is treated as intermediate expenditure because it involves expenditure on goods, which are single use producer goods. (ii) It is treated as final expenditure because it is expenditure on investment.

Explanation:

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Answer 2

Difference is as follows:

1. Final expenditure is the expenditure on those goods and services that are for final consumption or investment. Whereas, intermediate consumption implies that the given goods and services will be utilised for further production or for reselling.
2. Final expenditure can be incurred by both producers and consumers whereas intermediate consumption is done by only producers.
3. Final expenditure is included in national income whereas intermediate consumption is excluded.
4. No value addition occurs on the good and services that are procured through final consumption whereas value addition occurs for goods meant for intermediate consumption.
5. E.g. of final expenditure milk for household consumption. E.g. of intermediate consumption milk for  making ice cream by a manufacturing unit.