how to calculate national income through expenditure method?
First we cal. GDP at MP= private final consumption expenditure + govt. final consumption exp. + bussiness fixed investment +govt. fixed investment + investment on residental construction + inventory stock(closing stock - opening stock) + net export(x-m).
secondly, NDP at MP= GDP at MP - N.I.T
AT LAST, we cal. NNP at FC(NATIONAL INCOME)=NDP at MP + NFYA.
Expenditure method steps involved:
A. Identifying economic units andincurring final expenditure
Economic units are:
and, rest of the world
B. classification of final expenditure
final expenditure is classified as:
(a)final consumption expenditure: (i)private final consumption expenditure (ii)govt final consumption expenditure
(b)gross domestic capital formation:(i)gross domestic fixed capital formation (ii)changes in stock
(c)net exports=value of exports-value imports
C. GDP AT MP= FINAL CONSUMPTION EXPENDITURE+GROSS DOMESTIC CAPITAL FORMATION+NET EXPORTS
NATIONAL INCOME(NNP AT FC)=GDP AT FC-CONSUMPTION OF FIXED CAPITAL+NFIA-NET INDIRECT TAX