Remember : Net factor income from abroad will be + (add)

Net Factor income to abroad is – (minus)

Net export = Export – Import.

Net import = Import – Export

Net export + (add)

Net import – (minus)
Expenditure method.
GDPmp: C+I+G+X(export - import)
A : Final consumption expenditure on the good and services by the firm. Denoted by ‘C’.
Mostly it is households which undertakes consumption expenditure (private final consumption)

B : The Final investment expenditure denoted by ‘I’ incurred by firms on the capital goods.
The expenditure on intermediate foods in not included in the calculation of GDP, expenditure on
investment is included, the reason is that investment goods remains with the firm where as
intermediate foods are consumed in the process of production.

C : The expenditure that the government makes on the final goods and services produced by the
firm. Denoted ‘G’ the final expenditure incurred by government includes both the
consumption and investment expenditure.

D : The export revenues that the firms earns by selling its goods and service to abroad. This will
Expenditure method.

GDPmp = Private final consumption

+
Gross domestic final consumption/capital formation
+
Govt final consumption
+
Net Export
When Gross domestic Capital formation given GDPmp ₹445 Cr
1. Calculate a) GDPmp b) NNP fc NNPfc - ₹ 350 Cr
ITEMS ₹ in CGovenr

1. Indirect taxes 65
2. Depreciation 45
3. Net factor income form abroad (-)5
4. Private final consumption expenditure 290
5. Net export (-)20
6. Government final consumption expenditure 55
7. Gross domestic capital formation 120
8. Net change in stock 15
9. Subsidy 20
2. Calculate a) GDPmp b) GNPmp GDPmp ₹300Cr
ITEMS ₹ in Cr
GNPmp ₹280Cr
1. Private final consumption expenditure 200
2. Government final consumption expenditure 50
3. Gross capital formation 60
4. Net imports 10
5. Net factor income from abroad. -20
6. Export 40
3. Calculate a) GNPmp b) NNP fc
GNPmp ₹401Cr
ITEMS ₹ in Cr
NNPfc = ₹309Cr
1.Net factor income from abroad (-5)
2. Net export (-)7
3. Net indirect taxes 47
4. Net change in stock 13
5. Private final consumption expenditure 263
6. Government final consumption expenditure 50
7. Consumption of fixed capital 45
8. Gross domestic capital formation/Investment 100
2. When Gross domestic fixed capital formation given

P + G + Gross domestic fixed capital formation +Change in stock + Net export

GDPfc ₹10,030 Cr
NNPfc - ₹ 1,030 Cr
NNPmp- ₹ 1380 Cr
NNPfc - ₹ 125 Cr
GNPfc - ₹ 1650 Cr
GNPfc - ₹ 125 Cr
NNPmp - ₹ 640 Cr
Depreciation =

a) Gross domestic capital formation -Net domestic capital formation

b) Gross domestic fixed capital formation + Change in stock - Net domestic

capital formation

c) Gross domestic capital formation -Net domestic fixed capital formation +

Change in stock
 Practice a) GDPmp b) NNPfc
ITEMS ₹ in Cr
1.Net factor income to abroad (-5)
2. Net imports (-)7
3. Net indirect taxes 47
4. Net change in stock 13
5. Private final consumption expenditure 263
6. Government final consumption expenditure 50
8. Gross domestic capital formation 100
9. Net domestic capital formation 55
a) GDPmp b) NNPfc
ITEMS ₹ in Cr
1.Net factor income to abroad (-5)
2. Net imports (-)7
3. Net indirect taxes 47
4. Net change in stock 13
5. Private final consumption expenditure 263
6. Government final consumption expenditure 50
8. Gross domestic fixed capital formation/Investment 150
9. Net domestic capital formation 55