Which component increases when a foreign citizen buys medicine made in India?
Answer and explanation
Correct answer: Exports
The medicine is produced within India but purchased by a foreign resident. From India’s national-accounting perspective, this is a sale of a domestically produced good to the rest of the world, so exports (X) increase. In the expenditure identity C + I + G + (X − M), higher exports raise net exports, provided imports do not change. It is not a transfer payment or depreciation.
Frequently asked questions
What is the correct answer to this question?
Exports
Why is this the correct answer?
The medicine is produced within India but purchased by a foreign resident. From India’s national-accounting perspective, this is a sale of a domestically produced good to the rest of the world, so exports (X) increase. In the expenditure identity C + I + G + (X − M), higher exports raise net exports, provided imports do not change. It is not a transfer payment or depreciation.
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.
