Question

Expenditure method estimates national income from the
a) Outputside b) Income side
c) Expenditure side d) Savings side

Answer 1

Expenditure method estimates national income from the income side.

Answer 2

Expenditure Method estimates national income from the output side.

 Therefore, the correct answer is "A".

The expenditure method focuses on finding the total output of a nation by finding the total amount of money spent. according to economists this is a good way because for income, the total value of all goods is equal to the total amount of money spent on goods.


The basic formula for domestic output takes all the different areas in which money is spent within the region, and then combines them to find the total output.

  GDP =C+G+I+ (X -M)

 Here:

C = household consumption expenditures / personal consumption expenditures

I = gross private domestic investment

G = government consumption and gross investment expenditures

X = gross exports of goods and services M = gross imports of goods and services