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Explain the expenditure method of measuring national income.

Expenditure Method. 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. Under expenditure method national income is calculated first by adding up all the items of final consumption expenditure and final investment expenditure within domestic economy during a year. The resulting total is called GDP at MP. Then by subtracting depreciation and net indirect taxes from GDP at MP and adding to it net factor income from abroad, we get NNP at FC or national income. Thus in expenditure method, national income is measured at the point of actual expenditure by various economic units.
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    From the following data calculate national income, domestic income, personal income and personal disposable income :

     

    (र)

    Rent

    5,000

    Wages

    30,000

    Interest

    8,000

    Surplus of public sector

    15,000

    Profit tax

    2,000

    Personal tax

    1,500

    Mixed income

    4,000

    Undistributed profit

    3,000

    Transfer payment by government

    1,000

    Dividend

    12,000

    Net assets income from abroad

    7,000

    Transfer from abroad

    2,500
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