Question

Write short note on:

Expenditure method of measuring national income.

Answer 1

According to the expenditure method, national income is measured in terms of the total expenditure on final goods and services produced in an economy during an accounting year. The expenditure on the final goods and services can be broadly classified into the following four categories:

1. Private final consumption expenditure
2. Government final consumption expenditure
3. Investment expenditure
4. Net exports

The aggregate of expenditure incurred on domestically produced goods and services during an accounting year gives an estimate of GDP_MP.