When calculating GDP from the expenditure side,which of the following is true of the investment component,I_a?

Question

Quizplus · Accepted Answer

The investment component on the expenditure side of GDP includes changes in inventories (I_a). It also includes business fixed investment (such as construction of new factories), residential fixed investment (such as building new homes), and purchases of new equipment and software by businesses. However, it does not include the transfer of houses between individuals as it is not considered a productive economic activity. It also does not only include decumulation of inventories, as this would only reflect a decrease in inventory levels and not necessarily an increase in investment.

When Calculating GDP from the Expenditure Side,which of the Following