Conversely, the income approach starts with the income earned from the production of goods and services (wages, rents, interest, profits). 42. This is: Income from people in jobs and in self-employment (e.g. No, it is not included in the national income as it is a part of the factor income paid abroad. Profits of Reliance Industries from its chemicals business in Australia. The expenditure method is a method for determining GDP that totals consumption, investment, government spending, and net exports. No, it will not be included in the national income as it does not add to current flow of goods and services. Therefore, imputed value of laptops should be included. 2006} Yes, it will be included in the national income as it is a part of the gross domestic capital formation. Yes, it is a part of the compensation of employees and, therefore, it will be included in the national income. Yes, it is included in the national income because it adds to the current flow of goods and services. Yes, it will be included in the national income as it is a part of gross domestic capital formation. 65. The factors of production include land, labor, capital, and entrepreneurship. Yes, it is included in the national income as it is an income received for productive services. Expenditures on the purchase of cold drinks by a school canteen from the manufacturer. No, it will not be included in the national income as it is a part of the intermediate consumption expenditure. Money received from sale of second-hand goods. Services rendered by family members to each other No, it will not be included in the national income as it is difficult to determine the value of services provided by family members to each other. Definition: The Expenditure Approach is a method of measuring GDP by calculating all spending throughout the economy including consumer consumption, investing, government spending, and net exports. 53. GDP tracks the value of all goods and services produced within the physical borders of the United States, regardless of national origin. 9.
Income/Factor Income Method. Each one will give the same result. Yes, it is included in the national income as it is a part of the private final consumption expenditure. 61. Yes, it is included in the national income as it adds to current flow of goods and services. The measurement of GNP and GDP includes the value of Exports (X) and Imports (M). Expenditure method estimates expenditure on domestic product i.e., expenditure on final goods and services produced within the economic territory of the country. 60. Yes, it will be included in the national income as it is a part of capital formation. Subsidized lunch served to workers in a factory. Yes, it is included in the national income by Income Method since it is a part of ‘wages in kind’ paid to employees.
Expenditure Method vs. Income Method
Expenditure by government in providing free education. Old age pension is not included in national income as it is a transfer payment. Of the two, the expenditure approach is cited more often. No, it is not included in the national income as it is a part of factor income paid abroad. 32.
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