Question

1. Explain expenditure method of estimating national income. What are
the problems associated with this method? How can you resolve these
problems?
राष्ट्रीय आय का आकलन करनेकी व्यय विवि समझाएं । इस विवि सेजुडी समस्याएं क्या हैं? आप इन
समस्याओंका समािान कै सेकर सकतेहैं?

Answer 1

Explanation:

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Expenditure method measures final expenditure on ‘Gross Domestic Product at market price (GDP at MP) during a period of account.

Since all domestically produced goods and services are purchased for final use either by consumers for consumption or by producers for investment, therefore, we take sum of final expenditure on consumption and investment. This sum equals GDP at MP. Final expenditure is the expenditure made on purchase of domestically produced goods and services for final use, i.e., for consumption and investment.

Thanks

Answer 2

The "expenditure method" is a system for calculating "gross domestic product (GDP)" which combines investment, consumption, govt spending, & net exports. It is the most common way to "estimate GDP".

It is the most popular method of calculating GDP. eIt says everything private sector including private firms & consumers, & the govt spend within the borders of a given nation should be added to the overall value of all finished goods & services produced over a particular period of time. This produces nominal GDP, and must be modified to reflect inflation in order to generate real GDP.

Explanation:

Problems with Expenditure Method of Estimating National Income

1. Lack of reliable data
2. Problems of double counting

Precautions While using Expenditure Method

1. Only final expenditure must be taken int consideration to avoid double counting
2. Expenditure on second hand goods must not be taken
3. Expenditure on transfer payments by govt must not be included
4. Imputed value of "expenditure on goods" produced  for "self consumption" must  be considered
5. Expenditure on bonds & shares is not included

To know more

Give reason "National income estimates are accurate in India ...

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