In the expenditure approach to measuring GDP, the calculation of GDP excludes the value of which of the following?

• A. Intermediate goods and services used up in the production of final goods and services during the year
• B. Private investment spending on newly produced capital goods
• C. Final goods and services produced domestically during the year
• D. Government purchases of newly produced goods and services

Answer: (A)

Verified step by step guidance

1. Understand that the expenditure approach to GDP measures the total spending on final goods and services produced within a country during a specific period, usually a year.
2. Recall that GDP includes consumption, investment, government purchases, and net exports, but it only counts final goods and services to avoid double counting.
3. Identify that intermediate goods and services are those used as inputs in the production of final goods and services; including their value would count the same output multiple times.
4. Recognize that private investment spending on newly produced capital goods, final goods and services produced domestically, and government purchases of newly produced goods and services are all included in GDP calculations.
5. Conclude that the expenditure approach excludes intermediate goods and services used up in production to ensure GDP reflects only the market value of final output.