When using the expenditure method to account for gdp, the items that should be included are:
1. Consumption expenditures: personal consumption expenditures, including the purchase of goods and services, such as food, housing, health care, education, transportation and so on.
2. Investment expenditure: business investment in fixed assets and residential housing investment, including housing and construction, machinery and equipment, research and development.
3, government spending: government spending includes central and local government support for public **** undertakings, such as infrastructure development, scientific research programs, education, health care, etc.
4, net exports: net exports are exports minus imports, i.e., goods and services exported by domestic residents and enterprises to other countries minus goods and services imported from other countries.
The sum of the above four categories of expenditures is GDP.It is also important to note in the calculation that the expenditure method usually considers only the value of final goods and services and does not account for intra-industry transactions and transfers. In addition, the expenditure method also excludes illegal economic activities.
Calculation Process of the Expenditure Method
1. Calculate personal consumption expenditures (PCE), which includes purchases of consumer goods and services, such as food, housing, health care, education, and transportation.
2. Calculate business investment in fixed assets and residential housing investment, including housing and construction, machinery and equipment, research and development, and so on.
3. Calculate government support for public **** business, such as infrastructure development, scientific research programs, education, healthcare, etc.
4. Calculate exports of goods and services to other countries by domestic residents and businesses minus imports of goods and services from other countries (i.e., net exports).
5. Add the above four categories of expenditures to get the total value of GDP.
The expenditure method is one of the commonly used methods for calculating GDP, and it highlights the demand-side characteristics of GDP more than other calculation methods, such as the output and income methods. However, it is important to note that attention needs to be paid to data quality and accuracy in the actual calculation, as well as appropriate adjustments when dealing with different economic systems and industrial structures. The expenditure approach calculates GDP by counting final expenditures for various purposes.