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Expenditure Method of National Income, CBSE Class 12 Economics Video Lecture

FAQs on Expenditure Method of National Income, CBSE Class 12 Economics Video Lecture

1. What is the expenditure method of calculating national income?

Ans. The expenditure method is one of the approaches used to calculate the national income of a country. It focuses on measuring the total amount of expenditure made by various sectors of the economy, including households, businesses, governments, and foreign entities. This method considers four major components of expenditure: consumption, investment, government spending, and net exports.

2. How is consumption expenditure calculated in the expenditure method?

Ans. Consumption expenditure is a crucial component of the expenditure method. It represents the total amount spent by households on goods and services during a specific period. To calculate consumption expenditure, data on household spending patterns and consumption behavior are collected through surveys and other statistical methods. This information is then used to estimate the overall consumption expenditure in the economy.

3. What does investment expenditure include in the expenditure method?

Ans. Investment expenditure, as part of the expenditure method, includes the total amount spent on capital goods, such as machinery, equipment, and buildings, by businesses and governments. It also includes expenditures on research and development activities. Investment expenditure is an essential indicator of the level of economic activity and future economic growth prospects.

4. How is government expenditure accounted for in the expenditure method?

Ans. Government expenditure includes all the spending by the government on goods, services, and infrastructure development. This includes budgetary allocations for education, healthcare, defense, public administration, and other government functions. In the expenditure method, government expenditure is an important component that reflects the role of the government in the economy and its contribution to overall national income.

5. How are net exports accounted for in the expenditure method?

Ans. Net exports refer to the difference between a country's total exports and imports. In the expenditure method, net exports are included as a component of expenditure to measure the impact of international trade on national income. If the value of exports exceeds imports, it represents a trade surplus, contributing positively to national income. Conversely, if imports exceed exports, it represents a trade deficit, which negatively affects national income. Net exports are an essential factor in determining a country's overall economic performance.

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Expenditure Method of National Income, CBSE Class 12 Economics for Class 122025 is part of Class 12 preparation. The notes and questions for Expenditure Method of National Income, CBSE Class 12 Economics have been prepared according to the Class 12 exam syllabus. Information about Expenditure Method of National Income, CBSE Class 12 Economics covers all important topics for Class 122025 Exam. Find important definitions, questions, notes, meanings, examples, exercises and tests below for Expenditure Method of National Income, CBSE Class 12 Economics.

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