Multiple Choice
Which components are summed in the expenditure approach to measuring 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 correctly states the expenditure approach for computing GDP?
A
B
C
D
Verified step by step guidance1
Understand that the expenditure approach to GDP measures the total spending on final goods and services produced within a country during a specific period.
Recall the components of the expenditure approach: Consumption (C), Investment (I), Government Spending (G), and Net Exports (Exports minus Imports, or X - M).
Write the general formula for GDP using the expenditure approach as: \[GDP = C + I + G + (X - M)\]
Recognize that this formula sums up all expenditures by households, businesses, government, and foreign buyers (net exports) to calculate the total economic output.
Compare the given options to identify which one matches this formula exactly, confirming the correct expression for GDP by the expenditure approach.
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