Question

“Under the Expenditure Method, the value of Gross Domestic Product (GDP) can be estimated by adding the final expenditure incurred by all the sectors of an economy.”

In the light of the given statement, explain the expenditure incurred by any two sectors.

Answer 1

The final expenditure incurred by the sectors of an economy can be:

1. Private Final Consumption Expenditure: It is the expenditure incurred by households and non-profit institutions serving households on final consumption of goods and services.
2. Net Exports: It refers to the excess of value of exports of goods and services over the value of imports of goods and services during an accounting year.