Question

Along with government spending, what THREE factors make up gross domestic product (GDP) under the expenditure approach for calculating GDP?
A investment

B household income

C net exports

D tax revenue

E national debt balance

F consumer spending

Answer 1

The factors make up gross domestic product (GDP) under the expenditure approach for calculating GDP are as follows:

• investment
• net exports
• consumer spending

Answer: Option A, C, and F

Explanation:

The formula for calculating GDP by utilising the expenditures approach is Consumer’s expenditure + investment expenditure + Government’s expenditure + net exports, where net export can be obtained by subtracting the net imports from exports.

The alternate word which can be used for expenditure approach is demand approach and by summing up the total demand or expenses, we can get the aggregate demand. The expenditure approach is one among the most sought methods for measuring the GDP (Gross Domestic Product).