Suppose I earn factor wage ₹1000 in the year 2018 and I pay a tax of ₹100 to the government. So GDP by income method is ₹1000 as we ignore transfer payments. Now if I spent all my 900 on domestic consumption good but government expenditure is zero. So GDP by expenditure method is ₹900. What am I missing?

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    $\begingroup$ It looks to me like you need to write out a full set of accounts, How can you get a factor income of 1000 if you only have revenue of 900? It looks like the only way to get things to balance is if the government purchases 100. (No idea how to get that currency symbol...) $\endgroup$ Feb 5, 2018 at 21:26


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