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National Income Accounting — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsNational Income Accounting4 Marks
Question
Explain the precautions that should be taken while estimating national income by expenditure method.
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Answer

Precautions to be taken while estimating N.I. by expenditure method.
  1. Expenditure on intermediate goods should not be included otherwise it will result in double counting.
  2. Transfer payments such as gifts, old age pension etc, should not be included. These payments are not made for factor services
  3. Expenditure on financial assets like shares etc. Should not be included. This does not result in any production. It is only transfer of money.

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