How To Measure Of GNP By Aggregate Expenditure Method?


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Muhammad Abdullah786 Profile
If we sum all the expenditures made on consumption, investment, government's purchases and net income from abroad during a year, we got GNP.Consumption expenditures C.Here we include the consumption expenditures made on consumer durables, automobiles, furniture's, electronics, foods petrol and no services like education, health and recreation a year.

In addition to these explicit expenditures, the implicit expenditures are also included. The implicit consumption expenditures consist of self consumption of a part of wheat etc, by the producer farmer. Again, if an owner lives in his own houses, although he does not pay the rent, yet the amount of rent will be included in his consumption expenditures.
Government expenditures G.

In addition to private expenditures, there are certain government expenditures. These expenditures may consist of expenditures on health, education, administration, defense, construction of infra-structure and other productive and non productive activities.
Gross private investment I.

To make expenditures on those goods which producer further goods is known as investment. Accordingly, expenditures on machinery, plants, the inventories and share of some company are accorded as investment. In this respect not only expenditures on newly produced goods but no replacement of existing capital goods is also counted.
Export minus import X-M.To get GNP we minus exports from imports.

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