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Expenditure approach to measuring national income
It is done bu summing up the value spending on all final goods and services produced in the country. Such expenditures include consumption, investment, government expenditure and net exports in a given period usually a year
The approach centers on the component of [mal demand which generates production
NY =C+I +G+(X-M)
Where C = Expenditure by private consumers (Households)
I = Expenditure by firms on capital goods
G = Expenditure by government on services like education, health, infrastructure etc.
X – M = Net export earnings from abroad
Export (X) are included because they lead to inflow of income while Imports (M) are excluded because they lead to outflow of income
CATEGORIES Economics
TAGS Dr. Bbosa Science