The expenditure approach measures GDP by adding

Question

Quizplus · Accepted Answer

The expenditure approach adds up the following components: consumption expenditure, gross private domestic investment, net exports of goods and services, and government expenditure on goods and services. These represent the major categories of spending in the economy and together provide a comprehensive measure of GDP. Choice A is incorrect because it only includes income components, not spending. Choice C is incorrect because it subtracts subsidies instead of adding them. Choice D is incorrect because it includes both subsidies and indirect taxes, but only subsidies should be included in the calculation.

The Expenditure Approach Measures GDP by Adding