While estimating Gross Domestic Product (GDP) by expenditure method, entire focus is on expenditures incurred by the residents of the country.” Do you agree with the given statement ? Give valid reason in support of your answer.

Question :While estimating Gross Domestic Product (GDP) by expenditure method, entire focus is on expenditures incurred by the residents of the country.”
Do you agree with the given statement ? Give valid reason in support of your answer.

The correct answer is -Yes, I agree with the given statement. The expenditure method of calculating GDP involves adding up the total amount spent by all individuals, households, businesses, and the government within a country’s borders over a given period, typically a year. This approach is based on the assumption that all goods and services produced within a country are ultimately purchased by someone within that country. Therefore, by focusing on the total amount spent on goods and services, the expenditure method captures the total output of an economy.

Moreover, the expenditure method considers the consumption, investment, government expenditure, and net exports of an economy. These components represent the aggregate demand for goods and services produced within the country. Hence, by measuring the total expenditure incurred within the economy, we can calculate the Gross Domestic Product (GDP) of a country. Therefore, it can be said that the entire focus of the expenditure method is on the expenditures incurred by the residents of the country.