Which of the following will lead to an increase in the GDP of a country?
A) An increase in imports
B) An increase in expenditure on investment goods
C) A fall in the expenditure on consumption
D) A fall in the expenditure incurred by the government

Question

Quizplus · Accepted Answer

An increase in expenditure on investment goods will lead to an increase in the production of goods and services in the country, which will result in an increase in the GDP.

Choices A, C, and D are incorrect:
A) An increase in imports will lead to an increase in consumption, but it will not directly increase the production of goods and services in the country, thus it will not increase the GDP.
C) A fall in the expenditure on consumption will lead to a decrease in the demand for goods and services, which may lead to a decrease in production and employment in the short-term, causing a fall in the GDP.
D) A fall in the expenditure incurred by the government will lead to a decrease in the government's contribution to the GDP, which may cause a fall in the GDP.

Which of the Following Will Lead to an Increase in the GDP