ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The expenditure method is the most widely used approach for estimating GDP, which is a measure of the economy’s output produced within a country’s borders irrespective of who owns the means to production. The GDP under this method is calculated by summing up all of the expenditures made on final goods and services.

Detailed explanation-2: -The expenditure approach to calculating gross domestic product (GDP) takes into account the sum of all final goods and services purchased in an economy over a set period of time. That includes all consumer spending, government spending, business investment spending, and net exports.

Detailed explanation-3: -The expenditure method of calculating national income or gross domestic product takes into account the final goods and services produced in a country during a period of time. However, the expenditure method excludes the expenditures that are done on the purchase of shares, bonds, and second-hand goods.

Detailed explanation-4: -The income approach measures the total income that is earned by all the households in a nation. The expenditure approach measures the total amount of spending on goods and services that are produced within the domestic borders of the nation.

Detailed explanation-5: -Aggregate Income = GDP = Aggregate Expenditure. **The expenditure approach adds up the total spending on new production, while the income approach adds up all of the income earned by the resource suppliers in producing those goods and services. And in the end they add up to the same thing GDP.