Which of the following is a final and intermediate expenditure?

(a) Purchase of furniture by an office firm

(b) Expenditure on the uniforms of the staff of the hospital

(c) Expenditure on the repair and maintenance of office building

(d) Expenditure on the improvement of machinery in a factory

OR

Calculate wages and salaries from the following data:

$G D P_{m p}$ = 4200

Depreciation = 150

NIT = - 40

Rent royalty interest = 1650

Profits = 300

Employers contribution to social security scheme = 50

Employees contribution to social security scheme = 250

Dearness allowance = 140

Mixed income = 2000

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Solution

(a) This is a final expenditure as it is a capital good.

(b) It is intermediate expenditure to generate the final services in the hospital.

(c) It is an intermediate expenditure, because, it is the value spent to cover up the depreciation it has undergone.

(d) This is a final expenditure because it will increase the value of the machinery.

OR

$N D P_{f c} = G D P_{m p} - D e p r e c i a t i o n - N I T$

= $4200 - 150 - (40) = 4390$

$N D P_{f c}$ =Compensation of employees + Operating surplus + Mixed income of self employed

4390= 1550 + 300 + 50+140+2000+ Wages and salaries

4390= 4040+Wages and salaries

Wages and salaries = 350

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Giving reason identify whether the following are final expenditures or intermediate expenditure:
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(ii) Expenditure on improvement of a machine in a factory.

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$\begin{matrix} S. No. & Items & Rs. in crores (i) & Personal consumption expenditure & 730 (i i) & Wages and salaries & 700 (i i i) & Employer's contribution to social security schemes & 100 (i v) & Gross business fixed investment & 60 (v) & Profit & 100 (v i) & Gross residential construction investment & 60 (v i i) & Government purchases of goods and services & 200 (v i i i) & Gross public investment & 90 (i x) & Rent & 50 (x) & Inventory investment & 20 (x i) & Exports & 40 (x i i) & Interest & 50 (x i i i) & Imports & 20 (x i v) & Net factor income from abroad & (-) 10 (x v) & Mixed income & 100 (x v i) & Depreciation & 20 (x v i i) & Subsidies & 10 (x v i i i) & Indirect taxes & 20 \end{matrix}$

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