Define and briefly explain the expenditure method of calculating national income.

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answered Aug 30, 2022 by Ramesh nirvani (59.2k points)
selected Aug 31, 2022 by Taraknath Pal

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Expenditure method:

All domestically produced goods and services are produced for final use either by consumers for consumption or by producers for investment. Individuals incur expenditure (i.e. need to spend money) for using these gpods and services. The total expenditure in a given year is called the GDP i.e. Gross Domestic Product.
The method of considering the total expenditure incurred in purchasing finished goods or services during a financial year is called the expenditure method of measuring national income.
This method has been developed from the definition given by Prof. Fisher.
In this method, the national inosiepe is measured by summing up the total monetary expenditure incurred on goods and services by individuals, families, firms and government during a year.
Thus, National Income = Consumption expenditure + Investment expenditure + Government expenditure + Net export expenditure.