A foreign online service purchased by the domestic sector will be subtracted as what in the expenditure method?
Answer and explanation
Correct answer: Import
The expenditure method measures domestic production through C + I + G + (X − M). A foreign online service may be purchased by a domestic household and initially appear in consumption expenditure, but the service is produced outside the domestic economy. Therefore, its value is deducted as an import (M), preventing foreign production from being counted in domestic GDP. Exports are goods or services produced domestically and purchased by foreigners.
Frequently asked questions
What is the correct answer to this question?
Import
Why is this the correct answer?
The expenditure method measures domestic production through C + I + G + (X − M). A foreign online service may be purchased by a domestic household and initially appear in consumption expenditure, but the service is produced outside the domestic economy. Therefore, its value is deducted as an import (M), preventing foreign production from being counted in domestic GDP. Exports are goods or services produced domestically and purchased by foreigners.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Expenditure Method.
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