What are the four components that make up GDP in the expenditure approach?
A) Consumption, Investment, Government Purchases, and Net Exports
B) Consumption, Investment, Government Purchases, and Exports
C) Capital, Investment, Government Purchases, and Net Exports
D) Consumption, Income, Government Purchases, and Exports

Question

Quizplus · Accepted Answer

The expenditure approach to calculating GDP includes four components: consumption by households (C), investment by firms (I), government purchases of goods and services (G), and net exports (NX). Therefore, the correct answer is A, which includes all of these four components. B is incorrect because it only lists exports, rather than net exports (which takes into account imports as well). C is incorrect because "capital" is not one of the components, and NX (which is a negative number when imports exceed exports) is not included. D is incorrect because income is not one of the components in the expenditure approach to calculating GDP.

What Are the Four Components That Make Up GDP in the Expenditure