Question

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

Answer 1

Expenditure on maintenance of office building is an input in the production of final good. So, this will be treated as intermediate expenditure. Expenditure on improvement of machinery in a factory is an addition to the existing capital.