How is the expenditure method of measuring GDP calculated?
A)by adding up I + G + X
B)by adding up the final goods and services purchased domestically during a given period
C)by adding up domestic production of final goods and services for consumers, firms, government, and the international sector (through net exports)
D)by adding up the total expenditure of all firms incurred in the production of goods and services

Question

Quizplus · Accepted Answer

The expenditure method of measuring GDP is calculated by adding up domestic production of final goods and services for consumers, firms, government, and the international sector (through net exports). This includes consumption expenditure (C), investment expenditure (I), government expenditure (G), and net exports (X-M). Option A only includes I, G, and X, but not consumption expenditure. Option B only includes the final goods and services purchased domestically, but not those produced domestically but purchased abroad. Option D includes total expenditure of all firms, including intermediate goods and services, which can lead to double-counting.

How Is the Expenditure Method of Measuring GDP Calculated