Expenditure Method of National Income
The expenditure method of calculating national income or gross domestic product takes into account the final goods and services produced in a country during a period of time.
The formula for calculating national expenditure is:
National income = C + I + G + (X − M)
Where,
C = Consumption by residents of the nation
I = Investment
G = Government spending
X = Exports
M = Imports
Or National income = C + I + G + NX
Where,
Net exports (NX) = Exports – Imports
However, the expenditure method excludes the expenditures that are done on the purchase of shares, bonds, and second-hand goods.
Also Read:Â What are the Methods of Circular Flow of Income?
| Q.1 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Final consumption expenditure | 500 |
| (ii) | Final investment expenditure | 600 |
| (iii) | Net exports | 300 |
| Q.2 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Private final consumption expenditure | 800 |
| (ii) | Government final consumption expenditure | 450 |
| (iii) | Gross domestic investment | 125 |
| (iv) | Net exports | 30 |
| Q.3 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Household final consumption expenditure | 7800 |
| (ii) | Public final consumption expenditure | 6700 |
| (iii) | Gross domestic capital formation | 4500 |
| (iv) | Exports | 3400 |
| (v) | Imports | 1200 |
| Q.4 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Private final consumption expenditure | 1200 |
| (ii) | Government final consumption expenditure | 2400 |
| (iii) | Gross domestic fixed capital formation | 3500 |
| (iv) | Change in stock | 600 |
| (v) | Exports-Imports | 700 |
| Q.5 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Total final consumption expenditure | 1000 |
| (ii) | Gross domestic fixed investment | 2000 |
| (iii) | Closing stock | 5000 |
| (iv) | Opening stock | 4000 |
| (v) | Net imports | 1000 |
| Q.6 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Private final consumption expenditure | 2400 |
| (ii) | Government final consumption expenditure | 2040 |
| (iii) | Gross business fixed investment | 4200 |
| (iv) | Gross public investment | 240 |
| (v) | Gross residential construction | 400 |
| (vi) | Change in inventory | 200 |
| (vii) | Net exports | 420 |
| Q.7 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Private final consumption expenditure | 31300 |
| (ii) | Government final consumption expenditure | 13300 |
| (iii) | Net domestic capital formation | 31100 |
| (iv) | Depreciation | 1300 |
| (v) | Net exports | (-)3100 |
| Q.8 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Household final consumption expenditure | 21400 |
| (ii) | Public final consumption expenditure | 21600 |
| (iii) | Net domestic fixed capital formation | 11200 |
| (iv) | Change in stock | 1100 |
| (v) | Net imports | 3100 |
| (vi) | Depreciation | 1200 |
| Q.9 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Household final consumption expenditure | 1400 |
| (ii) | Public final consumption expenditure | 1600 |
| (iii) | Net domestic fixed capital formation | 1200 |
| (iv) | Increase in stock | 800 |
| (v) | Net imports | (-)300 |
| (vi) | Consumption of fixed capital | 200 |
| Q.10 Calculate the GDP at MP by using the expenditure method. | ||
| S. No. | Items | Amount ₹ (in crores) |
| (i) | Total final consumption expenditure | 2400 |
| (ii) | Net business fixed investment | 2600 |
| (iii) | Net public investment | 1800 |
| (iv) | Net residential construction | 700 |
| (v) | Decrease in stock | 300 |
| (vi) | Depreciation | 200 |
| (vii) | Exports | 200 |
| (viii) | Imports | 500 |
| Answer Key | |
| Q.1 | GDP at MP = ₹1400 crores |
| Q.2 | GDP at MP = ₹1405 crores |
| Q.3 | GDP at MP = ₹21200 crores |
| Q.4 | GDP at MP = ₹8400 crores |
| Q.5 | GDP at MP = ₹3000 crores |
| Q.6 | GDP at MP = ₹9900 crores |
| Q.7 | GDP at MP = ₹73900 crores |
| Q.8 | GDP at MP = ₹53400 crores |
| Q.9 | GDP at MP = ₹5500 crores |
| Q.10 | GDP at MP = ₹7100 crores |
This concept was about the expenditure method. Stay tuned for questions papers, sample papers, syllabus, and relevant notifications on our website.
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