Which of the following are used to estimate GDP by expenditure method?
(A) The final consumption expenditure on the goods and services produced by the firm.
(B) The expenditure that the government makes on the final goods and services produced by firm.
(C) Compensation of employees.
(D) The final investment expenditure
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (D) only
In the expenditure method of estimating GDP, we sum up all final expenditures on goods and services produced within the domestic territory. The main components are:
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(A) Final consumption expenditure by households (private consumption).
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(B) Government final consumption expenditure.
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(D) Gross investment or final investment expenditure.
(C) Compensation of employees is not part of the expenditure method; it belongs to the income method of GDP estimation.