Class 12 Expenditure Method Solutions | Prepared by CHK Students

The Expenditure Method is one of the most important approaches to calculate National Income in Class 12 Economics. For many students, solving questions using this method can be tricky due to multiple components and adjustments. To make learning easier, our CHK Student Keshav Khandelwal has prepared step-by-step solutions that simplify the entire process.

What is the Expenditure Method?

The Expenditure Method measures the final value of goods and services produced in a country by calculating total expenditure incurred by households, businesses, government, and the foreign sector.

In simple terms, it adds up all final expenditures to arrive at National Income.

Formula:

$\ (at\ market\ price) = C + I + G + (X – M)$

Where:

C = Private Final Consumption Expenditure
I = Gross Domestic Capital Formation (Investment)
G = Government Final Consumption Expenditure
X – M = Net Exports (Exports – Imports)

Steps to Solve Expenditure Method Questions

List all expenditure items given in the question.
Identify and exclude intermediate consumption (only final expenditure is counted).
Add private consumption, government expenditure, and investment.
Adjust net exports (X – M).
Deduct depreciation and net factor income from abroad (if asked).
Arrive at Net National Income at Factor Cost (NNI at FC).

Here’s the Solutions –

1. Calculate Net National Product at Market Price:

Items	(₹ in crore)
1. Gross domestic fixed capital formation	400
2. Private final consumption expenditure	8000
3. Government final consumption expenditure	3000
4. Change in Stock	50
5. consumption of fixed capital	40
6. Net indirect taxes	100
7. Net exports	– 60
8. Net factor income to abroad	– 80
9. Net current transfers from abroad	100
10. Dividend	100

2. Calculate National Income

Items	(₹ in crore)
1. Net factor income to abroad	– 50
2. Net indirect taxes	800
3. Net current transfers from rest of the world	100
4. Net imports	200
5. Private final consumption expenditure	5000
6. Government final consumption expenditure	3000
7. Gross domestic capital formation	1000
8. consumption of fixed capital	150
9. change in stock	– 50
10. Mixed income	4000
11. Scholarship to students	80

3. Calculate Net Domestic Product at Factor Cost

Items	(₹ in crore)
1. Private final consumption expenditure	8000
2. Government final consumption expenditure	1000
3. Exports	70
4. Imports	120
5. Consumption of fixed capital	60
6. Gross domestic fixed capital formation	500
7. Change in stock	100
8. Factor income to abroad	40
9. Factor income from abroad	90
10. Indirect taxes	700
11. Subsidies	50
12. Net Current transfers to abraod	(-) 30

4. Calculate National Income

Items	(₹ in crore)
1. Corporation tax	100
2. Private final consumption expenditure	900
3. Personal income tax	120
4. Government final consumption expenditure	200
5. Undistributed profits	50
6. Change in stocks	– 20
7. Net Domestic fixed capital formation	120
8. Net Imports	10
9. Net Indirect tax	150
10. Net factor income from abroad	– 10
11. Private Incom	1000

5. Calculate Net National Product at Market Price:

Items	(₹ in crore)
1. Net Current transfers to abroad	10
2. Private final consumption expenditure	500
3. Current transfers from government	30
4. Net factor income to abroad	20
5. Net exports	– 20
6. Net indirect tax	120
7. National debt interest	70
8. Net Domestic Capital formation	80
9. Income accruing to government	60
10. Government final consumption expenditure	100

6. Find Gross National Product at Market Price:

Items	(₹ in crore)
1. Private final consumption expenditure	800
2. Net Current transfers to abroad	20
3. Net factor income to abroad	– 10
4. Government final consumption expenditure	300
5. Net Indirect tax	150
6. Net Domestic Capital Formation	200
7. Current transfers from government	40
8. Depreciation	100
9. Net Imports	30
10. Income accruing to government	90
11. National debt interest	50

7. Calculate National Income

Items	(₹ in crore)
1. Net imports	5
2. Net domestic capital formation	15
3. Personal Income	90
4. National debt interest	10
5. Corporate tax	25
6. Government final consumption expenditure	20
7. Net factor income to abroad	– 5
8. Net indirect tax	10
9. Undistributed profits	0
10. Private final consumption expenditure	100

8. Calculate Net Domestic Product at Market Price.

Items	(₹ in crore)
1. Private Final consumption expenditure	400
2. Opening stock	10
3. Consumption of fixed capital	25
4. Imports	15
5. Government final consumption expenditure	90
6. Net current transfers to rest of the world	5
7. Gross domestic fixed capital formation	80
8. Closing stock	20
9. Exports	10
10. Net factor income to abroad	– 5

9. Calculate Net National Product at Market Price

Items	(₹ in crore)
1. Transfers Payments by government	7
2. Government final consumption expenditure	50
3. Net imports	– 10
4. Net domestic fixed capital formation	60
5. Private final consumption expenditure	300
6. Private Income	280
7. Net factor income to abroad	– 5
8. Closing Stock	8
9. Opening stock	8
10. Depreciation	12
11. Corporate tax	60
12. Retained earnings of corporations	20

10. Calculate Net Domestic Product at Factor Cost:

Items	(₹ in crore)
1. Net Current transfers to abroad	15
2. Private final consumption expenditure	800
3. Net imports	– 20
4. Net domestic capital formation	100
5. Net factor income to abroad	10
6. Depreciation	50
7. Change in stocks	17
8. Net indirect tax	120
9. Government final consumption expenditure	200
10. Exports	30

11. Calculate ‘National Income’.

Items	(₹ in crore)
1. Personal tax	80
2. Private final consumption expenditure	600
3. Undistributed profits	30
4. Private Income	650
5. Government final consumption expenditure	100
6. Corporate tax	50
7. Net Domestic fixed capital formation	70
8. Net Indirect tax	60
9. Depreciation	14
10. Change in stocks	– 10
11. Net imports	20
12. Net factor income to abroad	10

12. Calculate ‘National Income’ from the following

Items	(₹ in crore)
1. Net Imports	60
2. Net current transfers to abroad	– 10
3. Net domestic fixed capital formation	300
4. Government final consumption expenditure	200
5. Private final consumption expenditure	700
6. Consumption of fixed capital	70
7. Net change in stocks	30
8. Net factor income to abroad	20
9. Net indirect tax	100

13. Calculate ‘Net National Product at Market Price’ from the following.

Items	(₹ in crore)
1. Closing stock	10
2. Consumption of fixed capital	40
3. Private final consumption expenditure	600
4. Exports	50
5. Opening stock	20
6. Government final consumption expenditure	100
7. Imports	60
8. Net domestic fixed capital formation	80
9. Net current transfers to abroa	– 10
10. Net factor income to abroad	30

14. Calculate National Income from the following.

Items	(₹ in crore)
1. Net change in stocks	50
2. Government final consumption expenditure	100
3. Net current transfers to abroad	30
4. Gross domestic fixed capital formation	200
5. Private final consumption expenditure	500
6. Net imports	40
7. Depreciation	70
8. Net factor income to abroad	– 10
9. Net Indirect tax	120
10. Net capital transfers to abroad	25

15. Calculate ‘Net Domestic Product at Factor Cost’ from the following:-

Items	(₹ in crore)
1. Net Current transfers to abroad	5
2. Government final consumption expenditure	100
3. Net indirect tax	80
4. Private final consumption expenditure	300
5. Consumption of fixed capital	20
6. Gross domestic fixed capital formation	50
7. Net imports	– 10
8. Closing stock	25
9. Opening stock	25
10. Net factor income to abroad	10

16. Calculate National Income from the following:

Items	(₹ in crore)
1. Net current transfers to abroad	– 15
2. Private final consumption expenditure	600
3. Subsidies	20
4. Government final consumption expenditure	100
5. Indirect tax	120
6. Net imports	20
7. Consumption of fixed capital	35
8. Net change in stocks	– 10
9. Net factor income to abroad	5
10. Net domestic capital formation	110

17. Calculate Gross Fixed Capital Formation from the following data:-

Items	(₹ in crore)
1. Private final consumption expenditure	1000
2. Government final consumption expenditure	500
3. Net Exports	– 50
4. Net Factor income from abroad	20
5. Gross Domestic product at market price	2500
6. Opening Stock	300
7. Closing Stock	200

18. Find NDP at FC from the following data.

Items	(₹ in crore)
1. Gross Domestic fixed investment	10000
2. Inventory investment	5000
3. Depreciation	2000
4. Indirect taxes	1000
5. Subsidies	2000
6. Consumption Expenditure	20000
7. Residential Construction Investment	6000

19. From the following data, calculate the GDP at both (a) Market price, and (b) Factor Cost.

Items	(₹ in crore)
1. Gross investment	90
2. Net exports	10
3. Net indirect taxes	5
4. Depreciation	15
5. Net factor income from abroad	– 5
6. Private consumption expenditure	350
7 Government purchases of goods and services	100

20. Calculate the gross national product at factor cost from the following data:-

Items	(₹ in crore)
1. Net Domestic Fixed capital formation	350
2. Closing Stock	100
3. Government final consumption expenditure	200
4. Net indirect tax	50
5. Opening stock	60
6. Consumption of fixed capital	50
7. Net exports	– 10
8. Private final consumption expenditure	1500
9. Imports	20
10. Net factor income from abroad	– 10

21. Calculate Gross Domestic Product at market price from the following data:-

Items	(₹ in crore)
1. Consumption of fixed capital	50
2. Closing stock	40
3. Private final consumption expenditure	500
4. Opening stock	60
5. Net factor income from abroad	– 35
6. Exports	25
7. Government final consumption expenditure	200
8. Imports	40
9. Net indirect tax	100
10. net domestic capital formation	300

22. Calculate national income from the following data:-

Items	(₹ in crore)
1. Gross Domestic capital formation	100
2. Net change in stocks	10
3. Consumption of fixed capital	20
4. Private final consumption expenditure	500
5. Government final consumption expenditure	200
6. Exports	80
7. Imports	70
8. Net indirect tax	60
9. Net factor income received from abroad	– 10

23.

Calculate NNP at MP from the following data:-

Items	(₹ in crore)
1. Household final consumption expenditure	1000
2. Net domestic fixed capital formation	100
3. Government final consumption expenditure	200
4. Final consumption expenditure of private non-profit institutions serving households	50
5. Net change in stocks	40
6. Net exports	– 20
7. Net factor income from abroad	10
8. Indirect tax	70
9. Subsidies	20

24. Calculate GNP at MP from the following data:-

Items	(₹ in crore)
1. Government final consumption expenditure	300
2. Net domestic fixed capital formation	200
3. Private final consumption expenditure	2000
4. Consumption of fixed capital	40
5. Closing stock	50
6. Opening stock	40
7. Net exports	– 5
8. Net indirect tax	30
9. Net factor income from abroad	– 10

25. Calculate NDP at factor cost:-

Items	(₹ in crore)
1. Net domestic fixed capital formation	70
2. Private final consumption expenditure	300
3. Exports	20
4. Consumption of fixed capital	10
5. Government final consumption expenditure	100
6. Closing stock	15
7. Imports	30
8. Opening stock	5
9. Net indirect tax	80
10. Net factor income to abroad	– 10

26. Calculate National Income:-

Items	(₹ in crore)
1. Net imports	15
2. Net current transfers from abroad	10
3. Goods and services tax (GST)	30
4. Net change in stocks	5
5. Net domestic capital formation	60
6. Private final consumption expenditure	350
7. Government expenditure on providing free services	75
8. Depreciation	10
9. Net factor income to abroad	– 15
10. Subsidies	5

27. Calculate NNP at MP:-

Items	(₹ in crore)
1. Gross domestic fixed capital formation	80
2. Government final consumption expenditure	150
3. Closing stock	20
4. Private final consumption expenditure	500
5. Net domestic capital formation	70
6. Opening stock	20
7. Net imports	– 30
8. Factor income paid to abroad	15
9. Net indirect tax	40
10. Factor income received from abroad	10

28. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount (in crores)
(i)	Private final consumption expenditure	1200
(ii)	Government final consumption expenditure	2400
(iii)	Gross domestic fixed capital formation	3500
(iv)	Change in stock	600
(v)	Exports-Imports	700

29. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount Rs. (in crores)
(i)	Total final consumption expenditure	1000
(ii)	Gross domestic fixed investment	2000
(iii)	Closing stock	5000
(iv)	Opening stock	4000
(v)	Net imports	1000

30. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount Rs. (in crores)
(i)	Private final consumption expenditure	2400
(ii)	Government final consumption expenditure	2040
(iii)	Gross business fixed investment	4200
(iv)	Gross public investment	240
(v)	Gross residential construction	400
(vi)	Change in inventory	200
(vi)	Net exports	420

31. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount Rs. (in crores)
(i)	Private final consumption expenditure	31300
(ii)	Government final consumption expenditure	13300
(iii)	Net domestic capital formation	31100
(iv)	Depreciation	1300
(v)	Net exports	(-)3100

32. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount Rs. (in crores)
(i)	Household final consumption expenditure	21400
(ii)	Public final consumption expenditure	21600
(iii)	Net domestic fixed capital formation	11200
(iv)	Change in stock	1100
(v)	Net imports	3100
(vi)	Depreciation	1200

33. Calculate the GDP at MP by using the expenditure method.

S. No.	Items	Amount Rs. (in crores)
(i)	Household final consumption expenditure	1400
(ii)	Public final consumption expenditure	1600
(iii)	Net domestic fixed capital formation	1200
(iv)	Increase in stock	800
(v)	Net imports	(-)300
(vi)	Consumption of fixed capital	200

Also download – Class 12 Income Method Solutions

Why Use CHK Students’ Solutions?

Step-by-step approach with formulas.
Accurate and exam-focused answers.
Easy explanations for quick revision.
Prepared by toppers and subject experts.

Conclusion

The Expenditure Method is a scoring topic in Class 12 Economics. With the CHK Student’s solutions, you can easily understand concepts, avoid common mistakes, and perform well in board exams.

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Class 12 Expenditure Method Solutions | Prepared by CHK Students