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National Accounts using the Expenditure approach

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Topic updated on 02/14/2019 10:41am

Expenditure on final consumer goods like food, clothes etc and services by households is explained as private consumption expenditure.

Gross investment can be classified as

  • Gross domestic fixed capital formation
  • Change in stocks ( Inventories)

• Government purchases are the expenditures on goods and services by the government.
• Net exports is the difference between exports and imports.
• value of gross domestic expenditure comprises private consumption, gross
investment and government purchases.
• Expenditure on gross domestic production can be calculated by adjusting net exports
to gross domestic expenditure.
• Expenditure on Gross National Production can be calculated by adjusting Net Foreign
Factor Income to Expenditure on Gross Domestic Productions

The following types of expenditure are excluded by considering only effective economic activities

  • Transfer payments
  • Transactions of resale of goods
  • Expenditure on intermediate goods
  • Expenditure on financial papers.

Structure of resources can be explained as

Total resources = Gross domestic production + goods and non factor services imports.

Utilization of resources can be explained as

Utilization resources = Private consumption + Government consumption + Gross domestic capital formation + Goods and Non factors services exports.
(Explain using related data in Sri Lanka)

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