A household buying a new bicycle for personal use will be included under which category?
Answer and explanation
Correct answer: Private final consumption expenditure
A bicycle purchased by a household for personal transport or recreation is a final consumption good because the household is the final user. Its purchase is therefore recorded as private final consumption expenditure. It is not government consumption because the government did not buy it, and it is not private fixed capital formation because the bicycle is not being acquired as a productive fixed asset by a business. A purchase of a physical good is also not automatically financial investment.
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What is the correct answer to this question?
Private final consumption expenditure
Why is this the correct answer?
A bicycle purchased by a household for personal transport or recreation is a final consumption good because the household is the final user. Its purchase is therefore recorded as private final consumption expenditure. It is not government consumption because the government did not buy it, and it is not private fixed capital formation because the bicycle is not being acquired as a productive fixed asset by a business. A purchase of a physical good is also not automatically financial investment.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Consumption goods, capital goods, final goods, intermediate goods.
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