does any buddy can explain me value added method and expenditure method
Answers
Answer:
Explanation:
Product/Output/Value Added Method:
In the output method, national income is estimated by adding the value of all final goods and services produced within the economy during a given period of time. In order to avoid the problem of double counting and hence overestimation of the country’s total output, the intermediate production of goods and services should not be included in the final total. Alternatively the problem of double counting can be avoided, by summing up only the value added by each firm at different stages of production of goods and services rather than the final total. In simple words, the value added is revenue received from the output minus the cost of inputs received from other firms.
Expenditure Method
From the expenditure point of view,national income is the expenditure incurred on final goods and services purchased during one year.
Thus,national income by expenditure Method is the sum of demand for Consumption Expenditure on domestically produced goods(C), Investment Expenditure (I), Government Expenditure(G) and net receipts from Foreign Trade (X-M).Thus, by expenditure Method,
