In Private Final Consumption Expenditure, we include Purchase of Goods By normal residents in abroad and deduct purchase of goods in domestic territory by non residents
By doing so arent we making an adjustment for Net Imports and consequently after this adding net Exports under Expenditure method
Doesnt this nullify the impact and neither exports nor imports get accounted for in this method????
Dear student,
the purchase of goods in domestic territory by non-residents is neither imports nor exports. Exports are domestically produced goods which are sold to foreign countries whereas imports are foreign produced goods which are bought from foreign countries. So, no, here we are not making any adjustments for imports. Such adjustment is rather made when we add the net export component in the expenditure method.
the purchase of goods in domestic territory by non-residents is neither imports nor exports. Exports are domestically produced goods which are sold to foreign countries whereas imports are foreign produced goods which are bought from foreign countries. So, no, here we are not making any adjustments for imports. Such adjustment is rather made when we add the net export component in the expenditure method.