# how to calculate national income through expenditure method?

national income = private final expenditure + government final expenditure + gross domestic capital formation + net exports.

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thank you sanjana

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first of all we calculate gdp at mp=private final consumption expenditure+govt final consumption expenditure+investment expenditure+net exports

then deduct depreciation add net factor income from abroad and deduct net indirect tax then we get national income

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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.

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1.  Private final consumption expenditure
2.  General govt. final consumption expenditure
Final consumption expenditure (1+2)
3.  Gross domestic capital formation (GDCF)
(GDCF = Gross Domestic fixed capital formation + change in stock = valuables)
4.  Net export (N.E = Export - Import)

Gross domestic product at market price (GDPmp)(1+2+3+4)
5.  Net factor income from abroad
Gross national product at market price (GNPMP) (1+2+3+4+5)
Subtract (-)
6.   Net indirect taxes
Gross national product at factor cost (GNPFC) ( 1+2+3+4+5-6)
Subtract (-)
7.   Depreciation
Net national product at factor cost (NNPFC) (1+2+3+4+5-6-7)
Or national income
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Expenditure method steps involved:

A. Identifying economic units andincurring final expenditure

Economic units are:

household sector

govt sector

production sector

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

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