Question

Which of the following is excluded while calculating National Income as per the expenditure method?

Options

• Purchase of Second-Hand goods

• Purchase of financial Assets

• Intermediate goods

• All of the above

Answer 1

All of the above

Explanation:

Precautions to Take When Using the Expenditure Method:

(i) To avoid the error of double counting, only final expenditure should be considered.

(ii) Expenses for used goods are not to be included.

(iii) The government's expenditure on transfer payments is not to be included.

(iv) The implied value of expenditure on goods produced for self-consumption should be considered.

(v) Expenditure on stocks and bonds is not included in total spending.