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