Question

Classify each of the following items as a final good or service or and intermediate good or service and identity each item as either consumption expenditure investment or government expenditures:

a) banking services bought by Walmart

b) security system brought by the white house

c) coffee beans bought by starbucks

d) new coffee grinder bought by starbucks

e) starbucks grande mocha bought bye a student

f) new battle ship bought by the u.s. navy

Answer 1

Final good - A good which will be used for final consumption and not for resale.

Intermediate good - A good which will be used for further processing to make final product

Consumption Expenditure - Expenditure for goods and services by individuals and businesses in the economy

Investment Expenditure - Expenditure that result in creation of asset to generate return.

Government Expenditure - Expenditure of government on goods and services.

A. Banking sservices bought by walmart (Final good or service) ( consumption expenditure)

B. Security system bought by white house (Final good) (Government expenditure)

C.Coffee beans bought by starbucks (Intermediate good) (consumption Expenditure)

D.New coffee grinder boght by starbucks (final good) (investment expenditure)

E.Starbucks grande mocna bought by a student (Final good) (consumption expenditure)

F. New battle ship bought by US navy (Final good) (Government Expenditure)