GNP by expenditure method

According to this method GNP consists of the following elements:

1. Private consumption expenditure :The expenditures made by individuals on durable goods like car,washing machine,computer,television set and non-durable goods like cloths,shoes,food,beverage product in a country during a year are included under this handing.
2. Gross domestic private investment: The expenditure made by individuals on capital goods like building,machine,equipment are included in this heading.It also includes the investments made in new and replacement of old capital.But the expenditure made on the goods services produced in past and the financial investments made in credit underestimates are not included.
3. Government expenditure on consumption and investment :The government spends on the goods like paper,pen,cloth and the services like employees,police and army.The capital expenditures made on national security and defence are also regarded as the consumption expenditure.The government invests on capital goods like machine,equipments for government enterprises.
4. Net foreign investment :The differences between export and import is the net foreign investment.Since,the imported goods are not produced in a country,they should mot be included in national income.The goods exported are produced in a country.Hence, the value of import should be deducted from the value of exports.If the result is positive,it should be added to other expenditures and if negative,it should be deducted from other expenditure.