Question

Which of the following expenditures are included under the expenditure method of measuring national income?

• A. Investment expenditure
• B. Pension
• C. Government expenditure on scholarship
• D. Expenditure on shares and bonds

Hint:

Expenditure on final goods and services, including investment and government spending, contributes to national income using the expenditure method.

Answer 1

The Correct Option is A

Step 1: Understanding the Expenditure Method of Measuring National Income:
The expenditure method measures national income by calculating the total expenditure on final goods and services produced within an economy during a given period. This includes consumption, investment, government spending, and net exports.
Step 2: Analyzing the Options:
- Investment expenditure (A): This refers to spending on capital goods such as machinery, buildings, and infrastructure, which is included in the national income calculation under the expenditure method.
- Pension (B): Pensions are transfer payments and are not included in the calculation of national income because they do not represent payments for goods or services produced.
- Government expenditure on scholarship (C): While government expenditure is included in the national income, scholarships are not considered part of the expenditure method since they are transfer payments.
- Expenditure on shares and bonds (D): This is not included in national income, as buying and selling financial assets like shares and bonds do not represent the production of goods or services.
Step 3: Conclusion:
Investment expenditure is included under the expenditure method of measuring national income, making option (A) the correct answer.