Question

When the expenditure approach is used to measure GDP, the major components of GDP are:a. consumption, investment, indirect business taxes and depreciationb. employee compensation, rents, interest, self-employment income, and corporate profits.c. employee compensation, corporate profits, depreciation, and indirect business taxes.d. consumption, investment, government consumption and gross investment, and net exports.

Answer 1

Answer:

d. consumption, investment, government consumption and gross investment, and net exports.

Explanation:

GDP = PFCE + GFCE + GDCF + NX

By Expenditure method, GDP = expenditure by all sectors of economy - households, private firms, government, rest of world ; i.e :-

Private Final Consumption Expenditure  (Consumption) + Government Final Consumption Expenditure (Government Consumption) + Gross Domestic Capital Formation (Gross Investment) + Net Exports