Multiple Choice
For the purposes of GDP accounting, which of the following transactions is included in the calculation of a country's GDP?
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10. Measuring National Output and Income
Expenditure Approach for Measuring GDP
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following lists the main components used to calculate a country's Gross Domestic Product (GDP) using the expenditure approach?
A
Consumption, Investment, Government Spending, Taxes
B
Consumption, Investment, Government Spending, Net Exports
C
Consumption, Savings, Imports, Exports
D
Investment, Government Spending, Taxes, Net Exports
Verified step by step guidance1
Step 1: Understand that the expenditure approach to calculating GDP sums up all spending on final goods and services produced within a country during a specific period.
Step 2: Recall the main components of GDP using the expenditure approach, which are Consumption (C), Investment (I), Government Spending (G), and Net Exports (NX).
Step 3: Recognize that Net Exports (NX) is calculated as Exports (X) minus Imports (M), representing the value of goods and services sold abroad minus those purchased from abroad.
Step 4: Note that Taxes and Savings are not directly included in the expenditure approach formula for GDP, so any list including these is incorrect for this context.
Step 5: Conclude that the correct list of components for GDP by expenditure approach is Consumption, Investment, Government Spending, and Net Exports.
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