Q.From the following data, calculate Gross Domestic Product (GDP) by the expenditure method (all figures in Rs crore): Private Final Consumption Expenditure = 4,00,000; Government Final Consumption Expenditure = 1,50,000; Gross Domestic Capital Formation = 1,20,000; Exports = 60,000; Imports = 80,000.

This is a direct application of the expenditure-method formula, summing the four components of final demand.

The expenditure method states:

Substituting the given figures (all in Rs crore):

Step 1 — sum consumption, investment and government spending:

Step 2 — compute net exports:

Step 3 — add net exports (a negative number here, since imports exceed exports in this example):

Independent check: summing all five figures with imports carrying a negative sign directly — $4{,}00{,}000 + 1{,}50{,}000 + 1{,}20{,}000 + 60{,}000 - 80{,}000$ — gives the same $6{,}50{,}000$, confirming the arithmetic.

The most common slip is adding imports instead of subtracting them — imports represent foreign output that must be removed from domestic expenditure, not added to it. Also watch for sign errors when net exports are negative, as they are here.