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Homework answers / question archive / Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: (5 Marks) Banking services bought by a student New cars bought by Hertz, the car rental firm Newsprint bought by the National Post The purchase of a new limo for the prime minister
Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: (5 Marks)
Banking services bought by a student
New cars bought by Hertz, the car rental firm
Newsprint bought by the National Post
The purchase of a new limo for the prime minister.
New house bought by Alanis Morissette.
|
Item |
Final/Intermediate Good |
Consumption/Investment/Government Expenditure |
|
Banking services bought by a student |
Intermediate service- Banks act as a financial intermediary between savers who deposit money in banks and borrowers who take loans from banks. |
Consumption Expenditure since the services are being bought for personal use |
|
New cars bought by Hertz, the car rental firm |
Final good - The car is final as a product, that is, it will only be used as a medium for providing rental car services |
Investment in business equipment. The cars will generate revenue for the company by offering rental services. |
|
Newsprint bought by the National Post |
Intermediate good - The newsprint shall be used for printing daily news by National Post. It is basically a capital good - good used in producing other goods |
Investment in business equipment. |
|
The purchase of a new limo for the prime minister. |
Final good |
Government expenditure- The car shall be used for official purposes by the PM and so the expenses are borne by the government. |
|
New house bought by Alanis Morissette |
Final good |
Investment - Buying a new house adds to one's existing assets and generates wealth. |
