Explain the main steps involved in measuring national income through e

1.	Explain the main steps involved in measuring national income through expenditure method.
Answer» 1. Classify the economic units incurring final expenditure into distant groups like households, government, firms etc. 2. Estimate the following expenditure on final products by all economic units a. Private final consumption expenditure b. Government final consumption expenditure c. Gross domestic capital formation d. Net export (Sum total of above gives GDP_Mp 3. Deduct depreciation, net indirect taxes to get NDP_Fc 4. Add net factor income from abroad to NDP_Fc to arrive at NNP_Fc.

Explain the main steps involved in measuring national income through expenditure method.

Answer»

1. Classify the economic units incurring final expenditure into distant groups like households, government, firms etc.

2. Estimate the following expenditure on final products by all economic units

a. Private final consumption expenditure

b. Government final consumption expenditure

c. Gross domestic capital formation

d. Net export (Sum total of above gives GDP_Mp

3. Deduct depreciation, net indirect taxes to get NDP_Fc

4. Add net factor income from abroad to NDP_Fc to arrive at NNP_Fc.