In the expenditure method, foreigners' purchase of goods made in India increases which component?
Answer and explanation
Correct answer: Exports
When foreigners purchase goods or services produced within India, the transaction is recorded as an export because domestic production is sold to the rest of the world. In the expenditure identity, exports are represented by X and are added, while imports M are subtracted. Thus net exports enter as X − M.
Frequently asked questions
What is the correct answer to this question?
Exports
Why is this the correct answer?
When foreigners purchase goods or services produced within India, the transaction is recorded as an export because domestic production is sold to the rest of the world. In the expenditure identity, exports are represented by X and are added, while imports M are subtracted. Thus net exports enter as X − M.
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.
