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Questions and Answers
What is the purpose of deducting expenditure on imports in the calculation of market value of domestically produced goods and services?
What is the purpose of deducting expenditure on imports in the calculation of market value of domestically produced goods and services?
- To ignore the value of imported goods and services
- To encourage domestic production
- To avoid overestimating the value of domestically produced goods and services (correct)
- To promote international trade
According to the precautions in the expenditure method, why should expenditure on second-hand goods not be included in national income calculations?
According to the precautions in the expenditure method, why should expenditure on second-hand goods not be included in national income calculations?
- Second-hand goods have no value
- Second-hand goods are not domestically produced
- Including second-hand goods results in underestimation of national income
- The value of second-hand goods is already included in the year of production (correct)
Why should expenditure on shares and bonds not be included in total expenditure calculations?
Why should expenditure on shares and bonds not be included in total expenditure calculations?
- Shares and bonds are considered intangible assets
- Shares and bonds are not valuable
- Shares and bonds are unrelated to the production of final goods and services (correct)
- Shares and bonds lead to double counting
What is the purpose of including only final expenditure in calculating national income?
What is the purpose of including only final expenditure in calculating national income?
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