Here is what we know about a household: wages $25,000,unemployment insurance benefits $3,000,dividend income $4,000,income tax $5,000. What is the contribution to GDP of this household following the expenditure approach?

Question

Quizplus · Accepted Answer

The expenditure approach to GDP considers consumption, investment, government spending, and net exports. The household's contribution is its total income from wages, unemployment benefits, and dividends, minus taxes: $25,000 + $3,000 + $4,000 - $5,000 = $27,000. However, since the question asks for contribution to GDP, which is typically measured by consumption, the closest option is $28,000, assuming the household spends most of its income.

Here Is What We Know About a Household: Wages $25,000,unemployment