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Inventory goods - warehouses These are not yet marketed but...

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Inventory goods: A special mention needs to be made of the inventory goods which find an important place in the present national income accounts. This has not been mentioned earlier because it forms part of the current investment expenditure , other than consumption expenditure . It has three distinct elements. These are depreciation charges (D), expenditure on new capital equipment and goods produced or purchased, and inventories. We have already seen that depreciation charges enable replacement of the existing stock of capital. Therefore after excluding depreciation what remains is the net or current investment. But all of which is not the expenditure on the fresh purchase of the capital goods. Very often producers or sellers maintain large stocks of the goods in
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Unformatted text preview: warehouses. These are not yet marketed but are available for marketing. Such stocks both of finished goods and of raw materials together constitute inventories of the producers. Normally producers have some quantity of inventories which are intended to be so, however sometimes there may also be unintended inventories, when part of the goods remain unsold. In either case these inventory goods form part of the business expenditure and act as a future asset. Therefore these are included in the context of net investment expenditure. At the end of the year each business firm shows its investment account which includes a value of such inventories....
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