Question

Outline any two precautions that should be taken in estimation of National income by Expenditure method.

Answer 1

1. All final products irrespective of whether these are marketed or not, are to be included.
2. Expenditure on intermediate goods is to be excluded.
3. Expenditure on second hand goods is to be excluded.
4. Expenditure on financial assets is to be excluded.
5. Government expenditure on transfer payments is to be excluded.