Final Goods and Intermediate Goods

• The goods which are used for consumption purposes are called Final Goods.
• They are not used in the production of other goods. Eg.1kg Tomato bought & consumed by making it into a type of chutney. Here tomato is a final good as it is used for consumption. 
• Intermediate goods are those goods which are used to make final goods.
• eg. 1kg tomato bought by Kissan Sauce Company. The company makes sauce from the tomatoes and sells the sauce in the market. Here tomato is an intermediate good and sauce is the final good.
• Only final goods are included while measuring national income. If intermediate goods were also included, it would lead to double counting.

Types of Years

1. Calendar Year: From 1st January to 31st December
2. Financial Year: From 1st April to 31st March

Calendar Year is the same for all countries while Financial Year is Different.

Domestic Territory of a Country

In the ordinary language, concept of domestic territory means political or geographical boundary of the country. But in national income accounting the term domestic territory is used in a different sense. Domestic territory of a country is a concept wider than political boundaries of a country. It includes, besides political boundaries, the territorial waters of a country as well as its aeroplanes and ships operated by residents of the concerned county across different parts of the world and its embassies.

Definition of domestic territory includes the following:

i) Political or geographical boundary (including territorial waters) of the country.

ii) Ships and aircrafts operated by the residents of the country between two or more than two countries. For instance, Indian ships ferrying between Japan and Korea or passenger aircrafts flying between England and Canada are very much part of Indian domestic territory.

 iii) Fishing boats, oil and natural gas freighter or floating platforms in international territorial waters operated by the residents of that country or the territory of the country where the residents have the authority to explore oil. For instance, operating of fishing boats by Indian fishermen in the international water course of Indian Ocean is very much part of Indian domestic territory.

iv) Embassy of a country abroad, its trade commissioner, army installation, scientific station. information and immigration offices, aid agencies, etc. , For instance, Indian Embassy in America is a part of domestic territory of India but American Embassy in India is not a part of domestic territory of India