Q. With reference to the Expenditure Method of calculating GDP, consider the following statements:
1.Final expenditure includes only the consumption expenditure of households.
2.Expenditure on investment goods is included in the GDP calculation.
3.Imports are added to GDP, as they represent economic activity.
Which of the statements given above is/are correct?
Quarterly-SFG-Jan-to-March
Red Book

[A] 1 and 2 only

[B] 2 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Explanation:

  • Final expenditure includes not just consumption but also investment, government spending, and net exports.
  • Investment expenditure is a part of the GDP calculation.
  • Imports (M) are subtracted, not added, while calculating GDP.

Source- 12th NCERT: Economics: Macroeconomics

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