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Question : 23
Total: 49
"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.
Do you agree with the given statement? Give valid reason in support of your answer.
Solution:
No, I don't agree with the given statement.
Reasons:
(i) GDP includes final expenditure on consumption and investment in the domestic boundary of a country.
(ii) Domestic boundary includes Residents as well as Non-residents.
(iii) Non residents also contribute in value addition or production process in the domestic boundary of a country.
(iv) For Example, Samsung plant in India makes mobile phones and LED. So, final expenditure on these manufactured in India will be considered part of India's GDP no matter it is produced by nonresident.
(v) It is taken in GDP because it generates employment in the domestic boundary of a country.
Reasons:
(i) GDP includes final expenditure on consumption and investment in the domestic boundary of a country.
(ii) Domestic boundary includes Residents as well as Non-residents.
(iii) Non residents also contribute in value addition or production process in the domestic boundary of a country.
(iv) For Example, Samsung plant in India makes mobile phones and LED. So, final expenditure on these manufactured in India will be considered part of India's GDP no matter it is produced by nonresident.
(v) It is taken in GDP because it generates employment in the domestic boundary of a country.
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